STR Consumer Travel Insight reports indicate that online travel agencies are facing rising pressures due to shifting traveler perceptions.
EDINBURGH, United Kingdom—Online travel agencies have been a dominant force in the holiday booking space for years, but this dominance is coming under threat.
How hotels view working with OTAs is a subject covered recently by Hotel News Now, but STR’s Consumer Travel Insight reports offer a different angle on the rising pressure that OTAs face due to shifting perceptions among travellers. (STR is the parent company of Hotel News Now.)
This five-report series was based on the results of a comprehensive survey asking travellers about their behaviour and experiences undertaking international leisure trips. The survey was answered by 2,228 respondents of the STR Traveller Panel, a community of nearly 30,000 engaged global travellers.
Good signs for OTAs
In the first report in this series (free to download here), travellers were asked about their holiday booking methods and results were compared to the previous study conducted in 2017. The analysis highlighted that travellers were more likely to book their international holiday or short break accommodation using an OTA than by booking with accommodation providers directly.
Success highlights vulnerability to new competition
Asked why they had chosen to book their accommodation with an OTA, travellers gave as their key reasons:
It seems ironic that the most important reason to use OTAs, cited by more than half of customers, could be the reason why they might lose travellers to new platforms and technology in years to come. As a consequence, there appears to be a serious risk of potential customers being intercepted before reaching OTA services, by Google or perhaps the return of Amazon to the travel space.
Extensive advertising along with regular deals and promotions are certainly helping to attract new and repeat OTA customers. However, these methods are coming under increasing scrutiny. The U.K.’s Competition and Markets Authority has recently completed its investigation over concerns of misleading discount claims, pressure selling and other issues. One key outcome being the development of new principles to curtail methods which have given OTAs a helping hand in recent years.
Convenience and price: The battleground between accommodation providers and OTAs
Convenience and an easy booking process are strong motivators for travellers. Allowing customers to secure their accommodation with as few clicks, swipes and details entered as possible gives brands an advantage in trying to convert the time conscious traveller. Which is why it might be a little concerning to OTAs that these were the main reasons given by travellers who opted to book their accommodation direct:
In particular, it seems that millennials are most appreciative of a “slick” user experience: 66% of millennial travellers cited convenience and ease of booking as a reason to book direct.
While developing booking methods to ensure they are on the cutting edge for ease and convenience, accommodation providers should not lose sight of the selling proposition that is helping them win customers: value. Nearly 40% of travellers stated that a direct booking offered them the best deal, and 25% chose to book in part because of a loyalty or rewards scheme.
A further significant reason for booking direct, cited by 10%, is one any industry would be envious of: customers wanting to benefit the business directly. The latter result is one facet of a growing backlash to OTAs as some question their overall benefit to the local economy. This finding emphasizes the importance of accommodation providers showing off their authentic local credentials with a focus on how they put money into the economy around them to help secure guests.
The CTI reports gauged travellers interactions with major online travel brands, including OTAs and metasearch sites. Travellers were asked if they had used these brands to plan and/or book an aspect of their international holiday.
How many travellers used online travel brands
The CTI reports calculated conversion rates for a range of online travel brands, including OTAs such as Booking.com and Expedia:
Conversion of planners into bookers for Expedia
Why is this your most used online travel brand?
The importance of user experience cannot be overstressed as almost twice as many travellers cited ease of use as the reason for booking, as opposed to the site’s ability to find the best value deals.
After years of rising dominance in the travel industry, OTAs are finding themselves challenged more and more. Google threatens their ability to offer travellers all options for choosing their best holiday, while accommodation providers are competing to offer the best booking experience. On top of these factors, they must continue to innovate against other OTAs and new online travel brands. In the coming months and years, it will be interesting to watch how OTAs leverage their years of expertise and design experience to maintain their position in this competitive landscape.
STR’s Tourism Consumer Insights team will be keeping track of these developments as they happen and will be providing the important perspective of travellers on all of these events. If you are interested in understanding travellers’ views on OTAs or other aspects of the tourism industry, contact us at firstname.lastname@example.org.
Ruairidh Imlach is a research executive in the Tourism Consumer Insights team at STR.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.