Online platforms efficiently eliminate the hustle of the traditional methods. People no longer have to visit offline agencies and stand in a long queue to book their tickets. Online platforms have reached far in terms of evolution. The idea may have seemed unbelievable at first. However, OTAs (online travel agencies) like Expedia, Priceline (PCLN), and TripAdvisor (TRIP) have gained significant traction due to their offerings.
The online travel booking system works on two different models, i.e., the Merchant model and Agency Model.
In the Merchant Model, hotels sell rooms to Online Travel Agencies at a discounted price. Then, the agencies sell the rooms to the consumers according to their price range.
In Agency Model., Online Travel Agencies work as distribution partners and work on commissions.
Online Travel Agencies majorly operate through websites and applications. These websites offer information related to hotels, tourist places, tickets, and other packages to the guests. It also includes hotels, prices, features, and a list of hotels for users to choose from.
Online Travel Agencies: The New Face of the Travel Industry
Online Travel Agencies seem to be a new face of the travel industry. According to a study by Astute Analytica, the global online travel agency market is forecast to grow at a compound annual growth rate (CAGR) of 13.1% during the forecast period from 2021 to 2027.
Hotels all across the globe are investing highly in developing attractive websites. Furthermore, the agent model is the most popular model followed by the OTA platforms. Moreover, businesses follow various key strategies to attract audiences. These key strategies include promotion on social media, attractive packages, and offers, presenting reviews and videos, etc.
OTAs Platforms: A Significant Way to Establish Communication?
Users get hundreds of options to choose from. This increases the competition between the service providers. Aside from that, it also establishes communication between the end-users and the services providers. Users get to review their experience by posting a comment. As a result, a positive review attracts more audiences. Meanwhile, negative reviews give knowledge to the service providers about which areas need change.
OTA Platforms: A boon or Bane?
It is difficult to understand whether online travel agencies are a boon or bane for the hotelier industry. Online Travel agencies work as a third party that makes sure that a maximum number of rooms in a hotel are full. However, the added commission in the hotel pricing appears to be a significant challenge. The commission may be up to 20 % of the total revenue generated by the hotel per booked room.
Benefits of Online Booking
People book tickets through online travel agencies due to many reasons. Here is the list of benefits driving audience interest toward the online booking platforms.
If compared to traditional booking agencies, online travel agencies offer flexible options that users can compare anytime. These agencies constantly update their prices, and users can easily get updates anytime they open the website.
Traditional travel agencies require a person to be available at the location. However, OTAs are ‘open’ and ready to be accessible at any time from any place.
Time-Saving and Cost-Effective
Online platforms save time for the users. In addition to that, various platforms offer an effective discount which seems cost-effective. Thus, such benefits are shaping the scope of Online Travel Agencies.
Technology To Stay Forever
Technology is expected to change the outlook of every industry. Technology has evolved even during the global health crisis. Hotels adopted various efficient methods in order to survive in the market. Various businesses shifted to complete digital mode by deploying robots and offering online services. Thus, such circumstances are forecast to strengthen the potential of online travel agencies.
However, the hospitality industry still needs to work on more safe and efficient strategies to cater to the demands of the users. Various platforms witnessed a significant drop in terms of revenue. For instance, in 2021, Hays Travel announced to shut down its 89 shops as the Covid-19 pandemic devastates the travel industry. Aside from that, various prominent online travel agencies, such as Airbnb and Tripadvisor, registered a substantial fall in the number of bookings. Thus, such circumstances raise a need for more efficient transformation to survive.
Industry Players to Contribute to this Growing Trend
The scope of online travel agencies is undoubtedly strong. Industry players are also planning efficient strategies to expand their reach. For instance, in July 2020, Yatra Online Private Limited inked a partnership agreement with fintech startup Zaggle to offer streamlined, integrated expense automation solutions for corporates.
Recently, in March 2022, MakeMyTrip made headlines as it announced free homestays to 1,000 consumers. The selection of the consumers was based on a first-come, first-serve basis. The news attracted a myriad of customers. Various users got their free homestays on the MakeMyTrip app. In addition, Airbnb, an American company that offers homestays for vacation rentals and tourism activities, opened a technology hub in Bengaluru, India. Such policies are forecast to attract consumers beyond numbers, which will ultimately increase the scope of Online Travel Agencies over traditional agencies.
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