OTAs outshine metasearch sites in sending traffic to air and hotel suppliers, says study
New research out of PhoCusWright sheds interesting light on how well online travel agencies (OTAs) are performing in the US relative to metasearch sites, which aggregate fares and hotel offers from multiple sources.
Yet metasearch are managing only to persuade 2% of consumers to click through to the websites of air products, with only 1% of click-throughs to the websites of hotel suppliers.
PhoCusWright says that, by contrast, OTAs contributed 9% and 6% of the traffic going to airlines and hotels, respectively.
Explains Cathy Schetzina, senior research analyst for PhoCusWright:
In addition to the increased visibility afforded by the so-called ‘billboard effect,’ participating in OTAs likely drives more visits directly to supplier websites than participating in metasearch. In fact it is OTAs, rather than suppliers, that tend to garner the most traffic from metasearch.
All the news isn’t bad for metasearch sites as a group. They’ve been increasing click throughs by running a simultaneous search in a separate window rather than relying solely on deep-linked booking referrals.
For context, it’s worth reviewing some statements recently made by the CEO and CFO of the world’s largest travel company, Expedia.
According to Expedia chief Dara Khosrowshahi, who was speaking at a recent day for affiliates, out of every 100 consumers that visit Expedia.com to scan hotels information for a particular destination, only 5 of them actually book with Expedia.
Last year, when speaking at a Nasdaq investor event, Khosrowshahi said he saw metasearch sites as “frenemies.”
He said at Expedia, Inc., is able to acquire traffic from a very broad array of metasearch sites on a profitable basis, and more profitably than from Google, for example.
Now if I were to rank my channels as far as profitability, the most profitable channel for us is direct — someone coming to Expedia, someone coming to Hotels.com, et cetera.
So, what I’m trying to do in running this business from a long-term perspective is make sure that all of my channels are balanced; that I’ve got growth from the direct side of the business, growth from metasearch, growth from Google, growth from TripAdvisor, et cetera.
So far, we’ve been able to develop that kind of a product pipeline where all the channels are pretty balanced, and metasearch is yet another channel for us that we want to grow.
You know, metasearch has been around for a long time and we haven’t seen them drive an undue amount of traffic to direct sites. That’s what we feared in the early days.
It turns out a couple of things are true. One is that because online travel agencies are in the online game, we are much more aggressive participants with metasearch players. We are their leading customers.
We are optimizing our sites to work better with them, and we can invest in that channel in a way that supply directors can’t — they just don’t have the scale.
The second is that the consumer who comes to a metasearch site is by nature not a brand-loyal consumer. Right? So if you’re coming to that site, you’re announcing that you want availability, you want pricing; you don’t particularly care about brand. You might somewhat care about brand, but you’ve already segmented yourself.
So, once you get a set of results on metasearch with brand included in there, you’re not necessarily brand-loyal. So you’re still going to shop around. And as long as we, the online travel agencies, have pricing availability, we’re going to get a fair share of that traffic.
And we have for five or six years; I don’t see that changing on a go-forward basis. So I think those two factors contribute to the fact that Metasearch is — it’s a good channel; continue to be a good channel, I think for all the players
Mark Okerstrom, CFO of Expedia, had the following comments in February 2012 at the Goldman Sachs Technology and Internet Conference:
I will say that metasearch has been a very good channel for us. Again, the metasearch product is something that we generally do pretty darn well at, because again, only people that have the actual inventory — they can pump in rates and they can pump in the inventory — can participate.
And so that eliminates some of the competition in the field. It puts us and suppliers side by side.
Generally, people who are in metasearch are not people that are particularly brand loyal, because they would have already gone to the site. And therefore, by definition, they’re shopping.
And to the extent that someone comes from a metasearch player and provides their dates, we can land them on a landing page that says, “Hey, I know you’re looking for this Starwood Hotel for next week. By the way, here’s six others that look like that one and that other people have bought and you may like.” That gives us an advantage versus Starwood, who can just show them the Starwood Hotel.
And again, these are consumers that are shopping around. And so to the extent you can help them continue their shopping experience on your own website and convert them, it gives you, to some extent, advantaged economics in that channel.
And so we view metasearch, and really, that’s what that product is, as a real opportunity. And that’s why we’re one of the early participants in [Google Hotel Finder].
What about hotel owners, you ask? Hotel owners have to work with metasearch engines contractually to get traffic. For smaller- to medium-sized hotel chains and independent properties, trying to get programming time to react to the technology of all these sites is challenging.
As aggregating sites grow more rapidly than sales of airline tickets and hotel nights, hotels are increasingly put in a position of paying more money, for more clicks, only to capture the same number of bookings.
Some do the work in-house. rely on GDS tools, such as Pegasus’ MetaSeach Service, as a go-between.
But for OTAs, metasearch sites present a different contest.
Sean O’Neill is a New Jersey-based reporter for Tnooz. He is also a daily contributor of consumer news to LonelyPlanet.com.
He used to work for BBC Travel, BudgetTravel.com, and Kiplinger's, and used to live in London, New York City, and Washington, DC.