Online travel agency commissions: can hotel brands educate consumers?

By Online travel agency commissions: can hotel brands educate consumers?

Until a recent eye-opening experience, I’d never thought it made much difference to book via an OTA (Online Travel Agency) or via the brand’s own website, at least from the customer’s point of view. As it turned out, it makes a lot of difference. Restoring the balance of power with OTAs will be crucial for travel providers in 2014, and my experience shows that there is so much more they can do to drive direct bookings.

I fly the same route home every Christmas, so my typical booking process is to book my usual flight directly on the Easyjet website. But last Christmas I decided to ‘shop-around’ using an OTA, just in case I was missing out on other options. As it happened, my usual route was still the best choice and I booked it on the OTA as I was already on their website. No issues with that, but the challenges began a couple of weeks later when I wanted to add extra allowance for sports equipment. With a direct EasyJet booking, I could have easily logged in and amended my luggage allowance. Having booked with an OTA however, those conveniences were denied to me and I was made to call various customer service departments (at great expense) to modify my luggage allowance. Printing my boarding pass was an equally taxing experience, as I trawled through the OTA’s emails and tried to make sense of their instructions.

During all the years that I have booked directly with the airline, the brand has never communicated quite how easy they actually make it. If they had, they would have saved me a lot of time and, most importantly, saved themselves the OTA’s commission! Travel providers are constantly up in arms about OTAs extortionate charges, but they are missing a major opportunity to act as educators and rally consumers to their cause. Another example came up in our recent Hotel Insight Forum focus group, where a participant said: “I call the hotel and say I’ll book direct with them if they can give me a lower price or something extra. Many of them tell me there’s nothing they can do and that I should just book it online. I can’t understand that.” Travel providers need to understand what they can offer to attract more direct bookings and how to best promote these advantages.

In the meantime, we looked at the issue of OTA commissions in more detail in a recent survey. We asked consumers to state what percentage they think is retained as commission by online travel agents. The results revealed that across most markets, the majority think the commission is under 10% of the price paid. Even in the Middle East, where OTAs’ share of bookings is exceptionally high, three quarters of consumers think that OTAs get 10% or less.

But the average commission level stated by consumers is well below the actual figure. If consumers knew that a quarter of their money goes to the OTA, would they be more inclined to go direct to the brand website? That’s a tricky question to answer, but travel providers can start being more active by clearly communicating the benefits they offer to direct bookers.

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