tug of war reflects longstanding issue in hotel industry of battle between OTA and Direct Booking

The hotel distribution landscape is anyway a bit complex. And over the past decade, there has been a lot of transformation on this front.

NB: This is an article from eZee Absolute

The online travel agents (OTAs) have witnessed a spike as well as loss in OTA market share. And today, there are a huge number of hotels who have stopped putting much weight on OTAs and started promoting direct bookings.

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This old “OTA vs hotel direct bookings” battle has put accommodation providers in a dilemma. They are finding it hard to balance between both.

In this blog, we are going to compare the pros and cons of both OTAs and direct bookings to understand which is better.

The OTA vs Direct Booking Conflict

The opportunities OTAs present in terms of revenue are significant and it is crucial for hotels not to deprive themselves from such avenues. But hotels are still sceptical about relying on it. Let us understand why it has become such a huge battle. 

The rise of OTA bookings

Early on, hotel reservations were either made directly through a phone call, walk-in, or via a travel agent. But over the years, things have changed. Today, there are several ways to book a hotel room and one of them is through an OTA.

The concept of OTAs dates back to the days when Microsoft launched Expedia Travel Services in 1996 in the USA. Which was then just a tool to book a room quickly evolved and gained a lot of popularity due to good work and a lot of branding.

But there’s another reason that ushered the popularity of OTAs — lack of transparency in the traditional system.  

When brick and mortar travel agents and tour operators were still in the game, there was a serious lack of transparency. But OTAs stepped in and quickly formed a symbiotic relationship with hotels and travellers. They let everyone have a clear picture of everything.

Since then, OTAs became a go-to medium for travellers to book a stay, resulting in more and more hotel listings.

Also, why not!

Hotels were charged a modest commission, they were getting good advertisements, they didn’t have to spend much on their online fronts.  

According to a report, travel sales generated by OTAs were about 45% of entire European travel sales revenue in 2013. 

The rise of direct bookings

However, today, despite all the benefits of OTAs, hotels are getting second thoughts and considering direct bookings.

But why do hotels prefer direct bookings these days?

OTAs have lately increased their commissions, cutting into hotels’ profits. That’s not all. Hotels are becoming more concerned about their relationship with their guests. OTAs are at the front and this might not help hotels build a strong guest relationship.

Considering all of this, hotels are now struggling; they cannot let go of the OTAs as they contribute to their revenue, and also, they cannot solely rely on it too.

This is where direct bookings come into the picture. 

An increase in online bookings is inevitable and hotels are now spending significant resources and efforts in bettering their direct bookings. Securing a share is more important than ever now.

Let’s Address the Elephant in the Room: Which is Better?

Saying upfront that OTA is better than direct booking or vice versa wouldn’t be valid.

So, let us look at the similarities and the differences between both and see who wins the OTA vs direct booking battle.

Read rest of the article at eZee Absolute