It's no secret that online travel agencies (OTAs) have played a significant role in the tourism industry. OTAs allow travelers to search, compare, and book flights, hotels, and other tourist services. Thus, making OTA platforms a go-to-guru for low-cost travel.
"A recent study by Piper Jaffray found that consumers find the same or lower rates on online travel agencies 87% of the time."—Should You Use An Online Travel Agency For Your Next Trip? By Forbes.
So, should tour operators be partnering with OTAs? What are the advantages of doing so? What are the cons?
Before settling with an OTA, learn the ropes of OTA integration. Know the advantages and disadvantages. Also, consider what your business needs to their business terms.
Make sure to zero in on every detail. After finishing this guide, we promise you can best decide whom to partner with and what to consider before signing agreements.
What is an Online Travel Agency (OTA)?
OTAs (Online Travel Agents) provides travel services online through their own website. Airlines, hotels, car rental companies, cruise lines, vacation rentals, and other companies sell directly to them.
There are hundreds of such services operating around the globe. Some offer only hotel bookings, some focus on flights, and others provide package tours.
For tour & activity operators, OTAs help you reach out to new customers and increase your brand awareness. In addition, they can significantly improve customer service and reward programs. However, they charge commission fees per booking and integrating with them means you are subject to their booking cancellation terms.
A listing on an OTA can bring more traffic to your property's own website, as consumers often use OTAs for their searches before booking directly. As a result, the Billboard Effect occurs. According to a 2011 study, about 75% of consumers who make direct hotel reservations had visited an online travel agent website before booking directly with the hotel.
Thus, integrating with OTAs comes with both gains and losses. Let's take a closer look.
Advantages and Disadvantages of Online Travel Agencies
What Are the Advantages of Online Travel Agency Partnership?
To begin with, let's first know the benefits. Here are some of the key benefits, from marketing to increased bookings and from off-peak season benefits to valuable insights:
Increased Exposure and Brand Awareness:
OTAs have a large customer base. In partnership with these companies, you gain access to this audience and raise brand awareness. Thus, boosting your travel business' marketing efforts.
OTAs play a significant role in leisure and business travel worldwide, with millions of travelers using them every day. By using OTAs, you can reach potential guests in areas and volumes you would not be able to reach on your own. When entering the OTA arena, you can specialize in pilgrimages, leisure travel, business travel, or any other niche you choose.
The majority of OTAs target specific audiences. If you wish to target a specific market segment or region, you may want to check whether an OTA caters to that market segment. If your small B&B primarily caters to families, you should avoid joining an OTA that primarily caters to business travelers. You can learn more about an OTA's target audience by looking at the properties listed on their website or contacting a representative.
Increased Revenue from Indirect Online Bookings:
A significant source of revenue for tour & activity operators can come from indirect bookings made through OTAs.
Why do travelers love the booking experience via OTAs? Here are some reasons.
For instance, the variety of search and booking options OTAs offer makes it easy for your customers to find and book a suitable tour. Besides, many OTAs offer promotional opportunities to expand your customer base further. Thus, offering a quick boost to your digital marketing and helping you save time.
More reasons why customers love OTA bookings are detailed below.
Ease of Booking Process:
Tour operators can reach a broader audience and simplify the booking process by listing their tours on popular OTAs. The result is more bookings, a smoother reservation process, and more efficient management of reservations.
So before you partner with OTAs, see how your potential guests search, browse, and book on their traveler-facing websites. Other travelers may feel the same way if you find the experience frustrating. Frustrated travelers are likely to look at other options to fill their bookings.
Get more bookings during the off-season:
During the low season, tour and activity operators face a serious challenge in generating bookings. However, you can sell bookings even when business is slow by listing your tours and adventures on an OTA website.
OTAs can offer customers discounts and deals, making them want to book a tour despite the low season. Yes! Working with an OTA can boost your tour business during the slower seasons.
Gain invaluable insights:
The information from these platforms can be a valuable resource for your tours. OTAs provide valuable data to tour and activity operators by tracking travelers' booking behavior, customer demographics, and other further details about the customer information.
Using these insights, you can plan your tour packages, experiences, digital marketing, and services accordingly by understanding what your market wants and looks for.
What Are the Disadvantages of Online Travel Agency Partnership?
Partnerships with online agencies can be a helpful way to get your business out there and in front of a wider audience. However, it's wise to be aware of the potential downfalls before you take the plunge.
Consider these cons:
Commission Rates:
The high commission fee is among the most significant disadvantages of working with a third party. In some cases, these commissions can be 10% to 30% of the total cost of the booking. If you're working with a tight margin, this can significantly impact your profits.
What you can do:
Calculate the cost before partnering with an OTA. In some cases, working with an OTA can hurt your revenue.
Cancellation policies & terms:
When tour companies partner with OTAs, unfortunately, they must surrender control over their booking policies, such as cancellation fees, and agree to the conditions imposed by the OTA. In other words, guests may be charged fees or additional charges if they cancel their tour.
What you can do:
Read the contract carefully before signing on the dotted line.
Overbooking risk:
You can reach more potential customers through OTAs, but if you're not careful, they can create more work for you. OTAs often overbook your tours and activities, so you should be cautious.
Adding multiple online travel agents can create more work to manage overbooking your tours and activities. Perhaps you are already taking bookings over the phone, at your office, on your own website, and through resellers.
Selling through OTAs can be unproductive if you do it manually or use various systems and processes.
What you can do:
You can avoid double-bookings and overbookings by using a centralized booking system and channel manager that tracks all your travel bookings in one platform.
Here's what you need to consider when choosing a tour booking system:
- How To Choose A Tour Operator Software For Your Local Tour Business (Part 1)
- How To Choose A Tour Operator Software For Your Local Tour Business (Part 2)
Why Travelers Prefer OTA Bookings
But still, from a traveler's perspective, booking tours via trusted OTAs is an advantage.
Here are reasons why customers prefer booking adventures and experiences through OTAs:
Impartial reviews:
Like you and most of us— a customer's first criterion when choosing a tour or activity is impartial reviews from past guests. Customers can learn more about what to expect from their experience by reading honest reviews. This can give them the confidence to book, knowing they're making decisions based on unbiased information.
Are you strategically using customer reviews to boost your site's conversion rates? Here's how: What This Jaw-Dropping Truth Really Tells Us About Customer Reviews
OTAs are a helpful place for customers to find these reviews. OTAs often have comprehensive review sections, where customers can read about everything from the quality of the tour to the overall customer experience. This can help customers make an informed decision during the booking process.
Reward programs for future travel needs:
Guests can use rewards from OTAs for their future travel needs. In these programs, customers can earn points for every booking they make. For example, they may redeem these rewards for air miles, hotel stays, or car rentals.
When OTAs provide such loyalty programs, customers are encouraged to book through them. It gives them a chance to save on future travel and encourages them to stay with the same OTA.
Special rates are available through OTAs:
OTAs often offer discounts or other offers for booking multiple tours or activities in one transaction. This is why travelers who want inexpensive travel prefer to book with OTAs. They save money and have access to rewards reusable for their next trip.
Generous cancellation policies:
Customers may not have to pay the penalty if they cancel a tour they've booked through a third party.
An OTA, for example, may not charge a penalty if the customer cancels the ticket within the next business day. This gives customers a little bit of flexibility in the booking process if a change is needed.
Smart & informed booking:
Customers can easily compare prices and choose the option that is most suitable for them using online travel agents, which offer comprehensive listings of tours and activities.
As mentioned, it is common for OTAs to offer discounts and other special deals, which can make booking a tour even more affordable.
Established brand trust:
Most of the time, travelers don't know a better way to book than with a known OTA site. OTAs have established brands within the travel industry and appear better on search results.
Consider GetYourGuide, their site received a total of 11 million visits, in the month of May 2022 alone.
So, should you partner with an Online Travel Agency?
The decision is yours. You can partner with OTAs as you invest in any business venture. Reasonably, you'll have a fair share of its advantages and disadvantages.
The Advantages
OTA partnership can help you reach a broader market to generate indirect booking profits, especially in low-peak seasons. It can boost your digital marketing efforts since OTAs appear better on search results.
Each OTA offers different tools and analytics for managing revenue, pricing, and promoting your property. There are some larger OTAs that have whole teams dedicated to developing these tools, so it's important to determine which OTAs provide you with the most useful tools.
The Disadvantages
On the flip side, you may have to pay a fee for each booking. Since this is a partnership, you need to follow the terms and conditions of the OTA, which may affect cancellation and booking policies.
These agencies have established brands in both the online and tourism markets and cost-effective rewards and incentives. As a result, customers place more trust in booking through them.
You decide.
In a nutshell, a robust OTA integration can help you reach a broader market. Before agreeing, make sure you weigh the advantages and disadvantages.
In any case, you decide, make sure to choose an OTA that meets your company's policies and revenue goals.
TicketingHub's Online Booking System Makes it Easy
As a tour operator, you want to focus on what you do best: providing exceptional experiences for your guests. But in today's travel landscape, that means working with online travel agencies (OTAs) like TripAdvisor, GetYourGuide, and Booking.com.
If you aren't careful, managing those relationships can quickly become an all-consuming task.
Here's where TicketingHub online booking system comes in. With our online booking system and its seamless integration solution, we'll connect your tour operator business with all the major online travel booking platforms.
What's more, our online booking system technology gives you an edge over the competition. Our real-time availability updates ensure that your listings are always accurate. Our dynamic pricing feature allows you to adjust your prices on the fly to respond to market demand. And our easy check-out and booking process piques customers' interest quickly. As a result, you'll be able to maximize your revenue and grow your business.
Our goal is to make your OTA relationships and your ticket management in a centralized online booking system and management solution. So you can concentrate on what you do best: providing exceptional experiences for your guests.
We can connect you to:
- GetYourGuide
- Booking.com
- TripAdvisor
- TripXOXO
- TXGB
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