Challenges for Online Travel Agencies

The idea is that OTAs (booking sites) are getting replaced by metasearch engines as the go-to source for price comparisons on travel services.

How can accommodation providers benefit from this?

The rise of metasearch

This pressure is not unpredictable. On one side we have the supplier brand.com sites, who have begun an aggressive campaign to build direct relationships with the consumer. The benefits to them are game-changing for both cost and revenue: A cheaper distribution channel and an increased opportunity to merchandise and upsell to consumers.

On top of that, direct relationships allow supplier brands more intimacy and brand engagement with the consumer, a boon to loyalty programs as they invest heavily in loyalty marketing.

That sounds great to me.

Metasearch engines scrape information about rates and availability from multiple sources, including OTAs, brand websites, etc. and then direct the consumer to whichever site offers the lowest price to actually make the booking.

So how can we, as a hostels, make sure that the rates from our website get collected by the metasearch engines? Maybe through a direct feed from channel management software? Could anyone who understands how this works better than I do shed some light on this?

Here’s an article that makes the opposite argument from the one above. Essentially it says that large OTAs are going to win the metasearch booking battle, while small OTAs and individual properties are going to lose.

Meta works well for the largest OTAs, while many hotels suffer

Not all OTAs are created equal, and the largest ones appear to solidifying their market-leading positions — relative to smaller OTAs, opaque listings, hotel chains, and direct sales to individual properties — thanks to metasearch.

The article says that metasearch, in general, favors the larger OTAs, sending “a disproportionate amount of their traffic to OTAs and not to brand.com hotel sites.”

TripAdvisor’s new hotel metasearch engine in particular is said to favor the larger OTAs.

The key factor here is marketing. TripAdvisor’s hotel metasearch tool essentially allows companies to pay for placement at the top of its search results. Those top positions are important. As TripAdvisor CEO Steve Kaufer recently noted: “Positions four through whatever in meta get a tiny fraction of overall clicks.”

The article says that a sample of 13 hotels with direct APIs (who send their rates directly to the metasearch engines) have not seen in increase in revenue from their official websites during the TripAdvisor switchover to metasearch. The switchover only happened five months ago though, so there are still more data to be collected. A direct API connection through a channel manager could still be beneficial for accommodation providers.

Expedia CFO, Mark Okerstrom, explained why he thinks the big OTAs have such an advantage:

To the extent that someone comes from a metasearch player and provides their dates, [Expedia-owned OTAs] 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.

Another reason is that some of the biggest metasearch engines are owned by the big OTAs - Travigo by Expedia and Kayak by Priceline/Booking.com.

Straightforward explanation

The reason why metasearch is a friend of the OTA giants is simple: To the biggest marketing budget goes the spoils.

Consumers tend to only look at the first few results that appear in response to their query on metasearch. Corporations with enormous marketing budgets can greatly increase the chances that their results will appear at the top of the results, either through paid links or by gaming the organic results.