OTAs or Online Travel Agencies are websites that market and sell travel-related goods and services. They play an important third-party role in supporting suppliers like airlines, hotels, car rental agencies, and tour operators.
Online travel agencies can ease the challenges and offer travellers a level of personalization that individual airlines and hotels cannot deliver on their own.
In this Blog, you will learn what an Online Travel Agency is, how they work, the difference between OTA & traditional agencies, as well as the pros and cons.
What is an OTA?
An online travel agency (OTA) is a place where people can look up, compare, and book everything from flights, hotels, tours, and rental cars.
Online Travel Agencies typically support two models. These two models are the Agency Model and the Merchant Model.
Merchant Model OTAs are more prominent and make up the great bulk of OTAs.
Merchant Model Online Travel Agency receives a commission from the supplier for each reservation they make on the client’s behalf.
The agency model is commission-based and uses OTAs as a partner in distribution.
The full commission is paid to OTAs after the stay has occurred.
The hotel receives payment directly from the end user without any wait for a payment transfer from a third-party distributor.
The merchant model OTAs are more beneficial for the customers since they are more transparent.
The merchant model OTAs allows us to determine exactly how much the OTA is paying the supplier.
In the Agency Model, it may be less obvious how much of the price goes to the supplier because the OTA may increase the price of the room more than the service charge.
How Do OTAs Work?
Here is a general overview of how an OTA works:
1. An OTA combines travel-related inventory from different vendors, including hotels, car rental agencies, airlines, and tour operators.
2. An OTA has a user-friendly interface that enables users to search and compare travel options according to their travel dates, locations, and price ranges.
3. After the user chooses a travel option, the OTA contacts the provider to check availability and price before booking on the user’s behalf.
4. The OTA charges a commission or service fee from the user or provider for the booking.
5. After the booking is confirmed, the user receives a confirmation email or message containing details regarding the booking, such as flight or hotel reservations, itinerary, and payment information.
6. The OTA may also provide additional services to users, such as travel insurance, visa assistance, and destination information.
Advantages and Disadvantages of Booking with an OTA
The popularity of OTAs has increased in recent times. The reasons are OTA’s accessibility to user evaluations, low prices, and convenience.
OTAs have numerous advantages but there are some drawbacks too.
A few advantages and disadvantages are the following:
Wide range of options
OTAs offer a variety of travel options, including flights, hotels, rental cars, and activities. These options help customers find the best deals for their needs and budget.
OTAs allow travellers to select the best airline or hotel at a low price by providing them with the option of comparison.
Many OTAs offer package deals that include flights, hotels, and other activities. Such packages prevent customers from booking these components separately as it saves money.
Reviews and ratings
OTAs feature customer reviews as well as ratings for hotels and other accommodations. These ratings provide travellers with valuable insights from actual experiences.
Limited loyalty benefits
Some agencies may not offer loyalty benefits or perks when booking through an OTA. The loyalty benefits like earning frequent flyer miles or hotel rewards point to attract customers.
This can be a disappointment for travellers who value loyalty programs.
Risk of scam
There are numerous OTAs involved in scams or frauds. Such OTAs can put the personal and financial information of customers at risk.
How Technology is Changing the OTA Industry
Technology is playing a significant role in transforming the OTA industry.
The OTA industry is continuously evolving and adapting to the changing needs and preferences of travellers.
Here are some ways in which technology is changing the OTA industry according to the needs of travellers:
More options and control
Consumers now demand more with less effort and in less time. OTAs offer a wide range of options to travellers. OTAs provide flexibility to travellers since they can search and compare these options.
Travellers get more control over their travel plans empowering them to find the best travel packages possible.
The development of mobile apps for Online Travel Agencies is Inevitable
Mobile apps for OTAs allow travellers to search, book, and manage their travel plans on the go.
These mobile apps offer features such as real-time flight updates, mobile check-in, and push notifications. These features make it easier for travellers to stay connected and informed throughout their trip.
More value to personalization
OTAs use big data to target the right audiences with personalized offers. These offers lead to customised customer experiences such as creating itineraries and choosing the accommodation package.
Virtual and augmented reality
Virtual and augmented reality technologies provide immersive travel experiences and help customers visualize their travel plans.
For example, customers use virtual reality headsets to explore hotel rooms and destinations before making a booking.
OTAs can provide a more seamless online and offline experience to their customers to enhance the travel experience.
How to Choose the Best Online Travel Agency
One can follow these few steps before starting an online agency:
- Do the research.
- Choose the niche.
- Creating a business plan
- Secure funding
- Registering business
- Integrating travel APIs
- Developing a marketing strategy
- Partnering with suppliers
- Investing in a booking engine
- Implementing chatbot
- Offering mobile app booking
- Using data analytics
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Wrapping it up here…
Online travel agencies have revolutionized the travel industry and continue to offer travellers a convenient and efficient way to book trips.
As a travel technology company, we believe in empowering travellers with knowledge and tools to make informed decisions when booking their trips.
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