Hotel Distribution

OTAs and their business strategies: a race of giants

10 comments

15 May 2015 at 8:25, by

Starting-Line

Starting line race, Google Plus

Giants are known for their magnitude and colossal size. OTAs, young digital business models, have been able to make the most of this intangible scenario and grow with similar restraints, that is to say: none.

We live in a time of online commercialization giants. Some markets have their own idiosyncrasies, but globalization is pushing towards uniformity where the offers are all concentrated with a few global agents.

The results of 2014 couldn’t have been better for the online travel agent; a swift starting line was set for the industry giants. While Expedia and Priceline still shared 48% of the global tourist business, new players with past experience surged onto the market for 2015.

Buy, Buy, Buy

Expedia is a hungry giant. By devouring smaller companies that offer similar services it has consolidated itself as a one of the leaders in this segment. And it keeps going; Orbitz was its latest purchase. Other companies it has absorbed include Ebookers.com, Travelocity, Hotels.com, Hotwire and Venere.com, among others. These have all had a role to play in the expansion of Expedia as specialists in different markets or segments.

Diversify

Priceline is the giant with 10 hands. The mother OTA behind Booking.com looks for compliments for its main business, rather than additions, these help achieve a constant market growth. Hence it has surrounded itself with a circle of agents including meta search engines such as Kayak, marketing specialists like Buuteeq, restaurant reservation services like OpenTable or technological services for hotels such as Hotel Ninjas.

Old giants, new kingdoms

They were already an online giant, now they are searching for new, larger dominions and they have the weapons they need to take on new terrain: great financial and marketing reach. We are talking about Amazon, who at the beginning of the year announced their venture into the travel world with Amazon Travel. While this new platform is presently limited to the North American field, their growth strategy shows a clear desire to make the most of their marketing synergy and client relations. Customer knowledge together with product consistency and quality of service make up the three stays that a hotel should base their investments on. Their strategy: request the hotels 15% commission per booking.

Across the globe, in the East, at the end of 2014, Alibaba also joined the travel world industry, when they created an independent business called Alitrip. In this case the critical factor is the means itself: a market with infinite growth possibilities, last year alone the number of Chinese travellers increased by 20%.

The sector, even if only for cost efficiency, is heading towards a total concentration within the next few years, in which the present OTAs will stand out but where we will also need to keep an eye on new players such as Google or Apple who are sure to have something to say soon in this regards. They will set the trend and the hotelier will have to remain alert to all these changes in the hotel distribution world.

 

Idiso

Idiso

Idiso is much more than a technological service provider. Our mission is to provide real value to our clients. We want to become THE GLOBAL HOTEL SALES PARTNER, helping hoteliers sell more and better thanks to our 360º distribution and marketing solutions.

10 comentarios 

  1. Julia Biedemann 26 May 2015 - 14:25

    A lot of start-ups are trying to change the industry (or at least they claim to be). We are no different, but we do believe that Bidroom can be a contender to Booking’s throne. We charge a two percent commission to every accommodation regardless of their size or rating. On top of that, we also don’t engage in other dubious practices, such as advertising on hotel brands in search engines and setting rate parity agreements.

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