Why do consumers prefer booking with online travel agencies?

Many hotels are experiencing a notable increase in bookings coming from online travel agencies, most notably those from Booking.com.

At the same time, direct bookings, those generated from a hotels own website, are declining in both absolute and relative terms when compared to what OTAs generate.

And it makes no sense to believe that most OTAs outsell hotels and increase their total sales volume, based only on what is described as an unfair breach of the rate parity clause.

If this were true, cases like Booking.com would be inexplicable given that the selling prices on these websites are managed by the hotels themselves.

NB: This is an analysis by Francesco Canzoniere, ex-CEO of Viajar and now founder and managing director of Travel Performance.

This begs the question, why has a solution not been found to this unbalanced brokerage in this age of the internet?

Despite the common belief that tourists prefer to book their hotel directly and that the intermediary Booking.com and its peers add little value for the customer, the facts alone speak for themselves.

Not only are OTAs dominating in the arena of sales against direct bookings through hotel websites, they are also becoming the preferred reservation method for tourists, most notably when up against small chains and individual hotels.

According to a recent report from Google, The 2014 Traveler’s Road to Decision, 50% of corporate tourists prefer to book through a travel agency with approximately 33% of leisure tourists opting for the same.


To understand the enormity of this phenomenon, I want to share with you a snippet from a market study carried out by my consulting company.


As the diagrams show, direct booking through hotel websites seems to be the preferable option for tourists, however that preference changes dramatically when customer age is taken into account.


In the first diagram, we see that when booking on line 41% of tourists prefer to do so through OTAs like Booking.com and Expedia.

In the following diagram we see that once age is accounted for, 50% of people aged between 35 and 44 prefer to reserve through OTAs.

This age segment is not mere casual information, but should be seen as the principal focus point for OTAs overall for its importance in volume of bookingsand the segments purchasing power.

It would be very interesting to debate the results provided above but in order to elaborate further we would need to include additional variables, such as socio-demographics etc.

However, the message is clear: online travel agencies are, year on year, increasing their customer base as much as their volume of business.

It is important to highlight that this trend is not experienced by all online travel agencies in equal measure, as Booking.com and Expedia’s customer base completely overshadows that of other OTAs.

What are OTAs doing better than hoteliers in order to get more sales?

For the purpose of this post, an exhaustive analysis is not possible. Therefore, we will only take into consideration some of the more relevant tactics.

The two main tactics that OTAs have adopted to achieve their success over hotels are:

  • Winning New Customers
    Maintaining active clients, or those who were once active.

Key factors in winning new customers

The most influential factors when choosing a website or provider to purchase a travel itinerary and other tourist services according to a PhocusWright report are:


1) Family/Friend recommendations (word of mouth on positive experiences)

Building on this, a study by the New York Times provides an analysis of those factors that push people to recommend online services and/or products and lists them as:

  • To promote valuable content and enrich people’s lives
  • To define ourselves (how we view the world and what we care about)
  • To maintain, improve and nurture our relationships
  • For self-fulfilment
  • To get the word out about causes we care about

It is clear that if the OTAs are managing to awaken any of these stimuli within the user/customer/tourist, it is because they are doing a good job…

And for example, if no friends or family are interested in sharing their positive experiences of webs such as Expedia, then the OTA can introduce a ‘social proof’ that serves as a reference for other potential users.


2) Personalized offers and recommendation tailored by the OTA

On Booking.com, everything is designed to advise and focus (or divert, as appropriate…) the customer at all times. See some examples highlighted in red in the picture below.


However, the personalisation of results and suggestions, that are very common in tourist websites, is still in a state of development.

To better understand the client’s intention to purchase, it is not only necessary to collect and analyse huge amounts of data (big data) but also to collect users’ private information in order to feed the algorithms that are becoming more and more sophisticated.

For years, giants like Google and Amazon have been implementing technology to gather the important data used to characterise and personalise an offer.

The ultimate goal is to reduce the number of offers proposed to customers and, at the same time, increase their relevancy. Subsequently, the clients enjoy a better consumer experience, resulting in a higher conversion rate for the organisation.

Therefore, it is easy to foresee that the final battle for the client, between OTAs and hotels, will be fought – in the most part – within the capacity to understand and personalise the web experience for each customer.

What is more, the fact that OTA giants have begun to recruit specialists to interpret user data, known as “Data Scientists”, reinforces this vision.


The personalisation and tailoring of huge amounts of data, concerning the behaviour and desires of clients, has also given way to advancement in Customer Loyalty Programs. However, to store and use personal data, the authorisation of the customer is required.

3) First Time Buyer Offers


In the above image we see an example of how Expedia, through the use of their mobile application, publish coupons to encourage the first purchase.

More generic discounts, with fewer or no restrictions, also tend to act as ‘first purchase’ offers. Most people do not repeatedly buy trips within a short time-frame so that the “loyalty effect” of such discounts (as they often soon expire) is usually limited.

What is more, for small OTAs, where the rate of repeat purchase is even smaller, discounts without restrictions are even more important to win new customers.


4) The Power of Positive Reviews

Although sometimes they may promote biased opinions, articles appearing in newspapers, television reports, etc., can reach a wider audience, and finally work!


Of course, the more “authentic” opinions tend to be more effective however they are the hardest to obtain.


5) Search Engine Optimisation

The big OTAs invest enormous amounts of money on Google Adwords in order to position themselves in a prime position on the results pages of a travel-related search.


Online marketing campaigns, centred on the creation and promotion of brand notoriety, as well as sales oriented campaigns, are optimised by the OTAs to achieve the lowest cost to booking ratio possible.

To achieve a positive return on investment that guarantees the profitability of the OTAs operations, the company realises many activities to generate synergies between acquiring the customer and the experience of that same customer/user once they have entered the website.

The optimisation of the landing pages, use of dynamic pages and prospecting and remarketing techniques are all part of the optimisation strategy.


Cost optimisation is essential for the profitability of OTAs

To achieve economic sustainability in a situation where the costs of marketing (for example the cost of a Google click) are increasing, it is indispensable to create economies of scale regarding these incurred costs and generally reduce the weight of paid campaigns per reservation.

Moreover, the exact same marketing costs are also rising for hotels trying to promote their own website. Finally, searches for key words like ‘hotels in Rome’ (where costs are almost prohibitive) have become the battleground of a few large players.

The principal OTAs have, in the majority of cases, also overtaken the Hoteliers website regarding quality and quantity of content, for example in the detailed descriptions and photos of the hotel, doorstep amenities and attractions beyond, – guides, maps, reviews – the list is endless.

This has been done through major investment, to not only improve in terms of SEO (optimization of organic positioning) and get the best positions in Google natural results (“free of charges”), but also to enhance the website experience for their customers.

Until recently it was very difficult for a hotel to publish its ‘Guest Book’ comments. This applies specifically to hotel chains, where because of branding issues, or internal “political” problems, took too long to adopt this type of transparency.

Thus hoteliers let OTAs, often in collaboration with Tripadvisor, achieve the image of transparent sellers.

This is how they have gained the trust of millions of tourists online.

Looking ahead

With the emergence of P2P customer reviews, the OTAs have managed to give even more complete information, a better customer experience and get extra differential content (texts).

This in turn has helped them improve their organic rankings on Google, reaching positions in many cases above official hotel websites even for brand hotel searches (To see the magnitude of this you must also look at the results for a Spanish hotel indifferent international domains of Google, like www.google.ru for example.).

Moreover, the metasearch websites have allowed the possibility for increased visibility and popularity for the big OTAs as well as the less recognised, who apply generous discounts to the price of hotels in order to “promote themselves” as the cheapest channel for hotel booking.

When all is said and done, could they do better?

I don’t think so. So hats off!

NB: The second part of this article will examine ways in which online travel agencies improve customer loyalty.

NB2: This is an analysis by Francesco Canzoniere, ex-CEO of Viajar and now founder and managing director of Travel Performance. It was written to coincide with the first IT Travel Madrid event with Enterprise Ireland in October 2014.

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About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are those of the author. and do not necessarily reflect those of the author's employer, or tnooz and its partners.



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  1. Baraka

    15% to 25% is really high.The best way hoteliers can first to optimize their websites with real-time booking system. Advertise on meta search engines with lowest deal available with some inclusives not available on OTAs websites.

  2. Rbd

    Great article, i’m looking for some CPA and CPC for OTAs stats, can anyone help me with that ?


    The fact of the matter is with the growth of the OTAs who charge small operators up to 20 % for selling rooms ,the only people loosing out are the customers ,traditional B&B providers who use OTAs increase there rates to cover the OTAs fees , booking direct with the accommodation provider is always the best and cheapest option available .

  4. Wayne Brantley

    For me personally I have to lay the blame on the hotel industry. I travel quite a bit and there is not one hotel brand I am loyal too because none have given me a reason to be loyal. No hotel brand has made themselves stand out above the rest to me so that being said price is the only difference. I can go to an ota and check rates from multiple properties and pick the best rate available.

    • Virak

      I am agree with your point of view Wayne, But not all hotels act like that as i know some of high class resort they are really going to serve us the best. As late there are many new resort in Southern of Asia, i prefer to book through online agency because i need some information before i decide to book or not.

  5. Madding King

    Interesting read. The OTA’s are only getting larger- I recently published a piece describing how the OTAs are about to start listing vacation rentals by owner- the same type of listings on VRBO and AirBnB. Basically, the big OTAs have seen what those type of sites are doing and what a share of the revenue pie. If the regulation gets sorted out, the near-term should be interesting. Here is a link (posted on LinkedIn) if interested in the technicalities- http://linkd.in/1wW91xr

  6. Roy Manuell

    Great article and some really interesting figures here. Although OTAs are undoubtedly important for hotels in the process of drawing in guests, if some are charging up to 30% commission on nightly booking fees (Oliver Wyman) then surely the hotelier needs to find a solution, and needs to find one fast. Essentially, if hotels were to consider implementing in-destination mobile applications such as that of LoungeUp amongst others designed specifically for each hotel according to its services with the goal of better engaging with guests, then statistics show that this in turn increases guest satisfaction and loyalty, but most importantly strengthens the relationship between the modern traveler and his or her destination. Finally, by offering a direct next-stay reservation engine on the app, the guest can book a room with the same hotel without having to go through an OTA, evidently avoiding commissions. Is this the future of in-stay experience?

    • Francesco Canzoniere

      Hi Roy,
      Thanks a lot for your feedback!
      As I mentioned on the second part of this post, as long as the adoption of technologies is not aimed ONLY to substitute the main services of hotels (the key touch points), but rather as tools to improve and possibly scale these services, I do consider mobile Apps and other solutions as good investment options.
      See more on the second part of this post at: https://www.tnooz.com/article/online-travel-agencies-win-loyalty

  7. A Lloyd

    Interesting data. I think consumers are universally misled by OTAs.

    Firstly, rate parity does not mean “Cheapest Rate” but as it says equal rates for all channels including direct booking. However, Booking.com and other portals claim to “Guarantee” cheapest rates. This is impossible given the parity clause and I am amazed consumer groups and advertising standards have not picked up on this.

    Secondly, consumers believe they have more protection if they book through OTAs. Nothing can be further from the truth. In case of Booking.com and other pure Portals, your contract and conditions of such bookings are direct with the hotel and not the OTA (of course different with Expedia, Last Min, etc where you pay the OTA). So protection is no more or less whether you book it direct or through OTAs.

    Finally, OTA’s have littl e interest in ensuring places offered are licensed or meet safety requirements. We know as we did a survey. Only 1 OTA out of 20 we contacted wanted to see our operating licence, pool licence or our Public Liability Insurance. So if guests have a problem, then good luck as these so called “Intermediaries” or not responsible and if you want to sue any of them they are based in the USA. Hope you have a deep pocket! Read more about this issue on http://tinyurl.com/nq7x4tp.

    Consumers are being hoodwinked and misled on every front.

    • Francesco Canzoniere

      Thanks! I appreciate your feedback.
      Well, I am not sure that consumers are misled by OTAs, generally speaking. They might be so in some cases but I would not say that this is always the case. And to say the truth, even some hoteliers tend to mislead his potential clients, so…
      With respect to the legal issues that you mention, well, in my opinion, it is hard to make a general statement, since in Europe, licenses requirements and obligations may vary even from region to region of the same country!

      • A Looyd

        Francesco, than you for taking the time to read the article. I think your point about variation of licensing across Europe is valid but not the reason these OTA’s do not bother to check. They claim to be specialists therefore they should understand their local markets. Old fashioned Travel Agents did (and still do) visit the properties they promoted & had a clear understanding of the legal requirements. So to claim that “the market is large and complex” is a poor excuse.

        Public liability insurance is a universal requirement across all European countries and there is no excuse for not taking the steps to ensure clients are safe by OTAs. The fact is in most countries intermediaries are protected against “negligence” because there is no contract of supply between the guest & OTA unless OTA’s take the money direct (e.g. Lastminute.com or Expedia style). But even in these two cases, they do not ask for permits, Public Liability Insurance, etc. which is baffling and indefensible. CAVEAT EMPTOR (BUYER BE AWARE) appears to rule still.

        Of course there is no denying that people do misrepresent in every sector of commerce, but claims of “Up to 70% discount” or “Best Rates Guaranteed” are not even stretching the truth but are lies. This is beyond taking imaginative and creative photos to make your rooms or property look better than it is (a practice I would not recommend). OTA’s claims are simply not true and do not stand to even the most cursory scrutiny of any kind.

        • Francesco Canzoniere

          Well, it’s me that has to thank you for sharing your opinions and adding value to this conversation.
          Look, I do see your points, and I see the customer convenience in being better protected. Of course, we all want the maximum protection when we travel.
          I also reckon that the arguments of OTAs at this respect are pretty week, such as when they assess that through their genuine customers’ reviews (not always that genuine, though), they offer a fair good picture of the hotel and almost in real time. Isn`t it a week argument? At least I believe so.
          Obviously, the 70% off discount is usually a lie, usually, but I believe that this kind of lies generates bad results in the medium and long term, since people are not stupid and that they have memories… But we must also remember that this kind of “magical math” is often based on the Rack rate that the hotel has published. They could even say “150% off” or more in some cases… Anyway, I agree that these false promises should be pursued in a better way by public authorities (OTAs in Europe have gotten quite a number of fines so far but it hasn’t solved entirely the problem yet).
          But now, let’s consider also the other side of the story: when an OTA publishes a “photoshopped” picture of the hotel, how did they get it?… Yes, it was the hotel to provide it. Therefore, agencies should check better the contents they publish, but those that “manipulate” their hotel information (fortunately a minority), aren’t they also part of the problem?
          In conclusion, I see your points, and I tend to share them too. Nonetheless I always think that in a partnership, both sides are liable, for the bad and for the good. Maybe not 50-50 but usually they are not too far away from there. Well, that’s my opinion.
          Again, thanks a lot!

  8. Omar J

    Amazing article … very informative and useful

  9. Nick Stafford

    Francesco – very nice analysis and insight. I would add that there’s some early evidence showing that the OTA share of mobile bookings far outweights mobile direct. Not only are OTA’s leading here, but the “OTA” share is helped by the emergence of new business models such as Hotel Tonight, Hotel Quickly, Hotelied etc. I’ve heard claims of a 4:1 ratio OTA/brand on mobile bookings.

    • Francesco Canzoniere

      Hi Nick, thanks a lot for your comments! Well you are right, unfortunately for hotels, OTAs seems to lead the way towards mobile bookings. At least, so far, these are the data that have been disclosed to me by several hotels and chains. I’ll talk about it in the second part of this post too.

  10. Graeme Boyd

    I think the larger hotel brands are at least engaging with the OTAs, especially in search engine and social media marketing however smaller chains and independent hotels have a lot of catching up to do. I used to teach courses on search marketing through the HBAA in the UK. The staff sent on the courses were at a lowly level and many had the mindset that their website was an online brochure with a booking facility bolted on. It was a static marketing asset rather than a dynamic marketing tool. There was very little strategic thinking of how it could be used to actually compete for business. The upward rise of the OTAs is no surprise to me.

  11. Francesco Canzoniere

    Hello Ray,
    Thanks a lot for sharing your experience too. I must admit that I tend not to agree with the general statement that the customer belongs to the hotel, in my opinion it depends, but certainly you have raised some very good points: hotels need to be more active, with less improvisation and more strategic thinking. When something does not work, keep doing the same over and over, is unlikely to produce better results. So yes, hotels must try different things or pay the (rising) cheques of the OTAs.

  12. Francesco Canzoniere

    Thanks a lot for sharing your experience too.
    I must admit that I tend not to agree with the general statement that the customer belongs to the hotel, in my opinion it depends, but certainly you have raised some very good points: hotels need to be more active, with less improvisation and more strategic thinking. When something does not work, keep doing the same over and over, is unlikely to produce better results. So yes, hotels must try different things or pay the (rising) cheques of the OTAs

  13. Francesco Canzoniere

    Hello ulrich1
    Well what I am saying I think is different “…At the same time, direct bookings, those generated from a hotels own website, are declining in both absolute and relative terms when compared to what OTAs generate…”
    So no matter how much hotels are selling directly online, generally speaking, of course, the percentage of bookings they are receiving through OTA is increasing. As you will see in the second part of this post, data shown come from major USA hotel chains too.
    I agree that the number of hotels that are respecting rate parity is decreasing but still the majority of hotels (in Europe and all over) tend to respect it. But the most important thing is that the “rate parity lesson” has been learned by most customers and it is very difficult to change it.

  14. Ray Mason

    Just about every hotel I speak to tells me that OTA bookings are growing faster than any other source, and their monthly commission payments are rising as a result. Unfortunately for hotels, the OTA’s are doing a great job at building customer loyalty for all the reasons stated above (and no doubt more in the second part of this article to come).
    The problem in many cases is that most hotels are not sure what to do about their growing reliance upon OTA’s for bookings.
    Hotels need to have a strategy for taking greater ownership of THEIR customers / guests and start to build their own relationship with the guest .
    We are now using some new tools and technology which can harness the rich data held in the hotel Property Management System (PMS) along with other data collection methods to generate personalised communications to segmented groups of past and potential guests, and to encourage repeat bookings to be made directly on the hotel website. Pay an OTA for the first booking – this probably represents good value for introducing a new customer – but why pay the OTA another commission cheque for future bookings from that same customer?
    Yes, the hotel’s own website has to be fit for purpose (and unfortunatly many hotels have not updated theirs in a while, which is shocking given that the one-off cost of a new site is often less than the commission cheque they write to booking.com every month!), but unless hotels start to do something different, then the OTA’s will continue to grow and control their distribution, and increasingly commoditise their product.

    • Ali Kansou

      Excellent analysis Ray, I could not explain it better… We face the same in our region in the Middle East !

  15. ulrich1

    What is stated here is largely true for independent hotels but not for major chains which get between 50% and 75% of online bookings on their own websites. They also have leverage in that they can withhold loyalty points if the customer books through an OTA. Also rate parity is breaking down as the chains can now make discrete ‘closed group’ discounted offers to loyalty program members for instance.


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