Hotels & OTAs

by Aurore VirnaudNovembre 2011

Tourists get social and mobile

•Tips from people worldwide

•Interactive bookings

•Mobile travel guides

Travellers are active social media users

•About 79 million people (52% of the 152 million adult leisure travellers) already use social media.

•More active on Facebook, social sites, daily use of the internet

•Still rely heavily on « traditional » sources of informations : firends, family, brochures, media …

•So social media is still at an early stage

Different Booking Models

• Merchant website : Third-party distributor where the hotel provides inventory to the site at a net rate. The merchant marks up the rate by an agreed-upon percentage. The consumer pays the merchant at the gross rate and the merchant site pays the hotel the net rate (e.g. Expedia, Hotels.com, Travelocity, Orbitz)

• Opaque website : Third-party distributor that enables customers to choose a fare or rate without knowing the brand of the supplier until after the item is purchased (e.g. Priceline, Hotwire)

• Brand website : Website where distribution is operated and managed by the brand (aka “brand.com,” the direct booking channel)

• Retail website : Third-party distributor where the hotel lists inventory at the same price that it is sold to the consumer and hotel pays distributor agreed-upon commission (e.g. HRS, Bookings, Venere)

Source: TravelClick

What is an OTA ?

•Websites on the Internet dedicated to travel and booking capabilities.

•Help hoteliers to capture reservations they would not have normally captured through their own hotel reservation website.

•Provides global exposure

The « Big Four » OTAs

• Expedia

• Travelocity

• Orbitz

• Priceline

• They get a lot of attention from the media and the industry at large.

Expedia Inc.

• The largest online travel company in the world

• Extensive brand portfolio that includes :

▫Expedia.com ▫Hotels.com ▫Hotwire▫Venere.com▫Egencia▫Classic Vacations luxury travel specialist▫eLong

Travelocity.com

• Subsidiary of Sabre Holdings Corporation

• Sixth largest travel agency in the United States and the second largest online travel agency.

• Offers deals from most of the world's airlines, hotels, car rental companies, and vacation packages.

• Brand portfolio that includes :

▫ Lastminute.com ▫ Zuji.com ▫ World Choice Travel, a travel affiliate marketing program▫ IgoUgo, an online travel community and travel-planning

resource▫ AllHotels.com

Orbitz Worldwide

• Uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products.

• Strong global portfolio of consumer travel brands that includes :

▫ Orbitz.com▫ CheapTickets.com▫ ebookers.com▫ HotelClub.com▫ RatesToGo.com▫ the Away Network▫ Asia hotels▫ corporate travel brand Orbitz for Business.

Priceline.com/Booking.com

• Booking.com = part of Priceline.com

• Europe's leading online hotel reservations agency by room nights sold, attracting over 30 million unique visitors each month

• Offers competitive rates for any type of property, from small independent hotels to a five star luxury.

• The site is available in 21 languages from and offers over 71000 hotels in 71 countries.

Hotels get a better positioning thanks to OTAs

Hotels & OTAs, not a bliss

• In the past : OTAs allowed hotels to choose to participate on 10% commission retail basis, and they would access rates and availability from GDS

• Now : OTAs would not promote your hotels unless you switched to a merchant model basis where you would give a deeply discounted net rate and then they would mark it up significantly.

• Hotels have less control on their prices

• High commissions to pay when there is a decrease in their average daily rate

Direct Chanel vs. OTA

• I took the example of the hotel Intercontinental Paris Le Grand :

• On the hotel website : a standard double room for two persons, night of December 16th costs 284€ (see here)

• On Expedia.com : a standard double room for two persons, night of December 16th costs 284€. (see here)

• As we can see, the rate is the same, but chec k on the links and you will find out that if you book directly through the hotel website you will have more choices than those proposed by Expedia.com.

• Moreover, the Expedia.com deal is not refundable !