Booking direct or via OTAs: what’s the better deal?

Young woman using credit card to make payments online

Hotels and OTAs might be in an all-out war, but some travel experts think you can book with both, it just depends on when you’re looking to book.

Mark Blutstein, research analyse with travel research firm, Phocuswright, says older travellers, who are more likely to have clocked up a bunch of loyalty and reward points, will be more likely to book direct.

Meanwhile, the millennials – who’s trends we can barely keep up with – are just “looking for the best deal they can get”.

In some cases, such as where hotels or airlines offer discounts or perks for going direct, it can be better to skip the OTAs, but the OTAs can also be important tools for travellers when used properly.

According to MarketWatch, there are specific conditions that can make either one the better choice.

When to book directly

Bjorn Hanson, a professor with the New York University Preston Robert Tisch Center for Hospitality and Tourism, told MarketWatch that there are typically three rates travellers choose from; a public rate with no discounts, a discounted rate for members of loyalty programs, and a discounted non-refundable rate.

“Almost always, one of those three will be as low or lower than the rate through an online travel agency for a similar arrangement,” Hanson said.

And because OTAs like Expedia are charging commissions for bookings they get, hotels aren’t putting their best deals on these search and comparison websites.

“There’s some price cutting we’re seeing in the marketplace to drive direct bookings,” said Dara Khosrowshahi, Chief Executive of Expedia, per MarketWatch.

But low costs aren’t the only benefit, with perks like upgrades and free Wi-Fi often a plus of booking direct through hotels.

“Chances are you’ll be treated a little better [when booking direct], but sometimes you do need to call it out to them,” said Gautum Lulla, President of Travel Tripper, a hotel booking tech provider.

Again, booking direct can come in handy when things like flight delays or last minute cancellations crop up.

This is according to Scott Mackenzie, founder and Editor-in-Chief of Travel Codex, a website that covers news about travel loyalty programs, says MarketWatch.

“Whenever there’s a delay or cancellation, it makes it a lot easier to re-book the ticket,” Mackenzie said.

“There also may be more flexibility with the rules.”

But, MarketWatch also says OTAs can be used for “showrooming”; basically, giving travellers an idea of which hotel or airline has the best deal before they book direct.

But then again, some OTAs have also taken alternative roads to incorporate travel mishaps, like Booking.com’s ‘pay-when-you-stay’ model.

Priceline Group’s Head of Global Communications Leslie Cafferty told MarketWatch, “[This means] most bookings are cancellable (via one click on the site) up until close to the time of booking”.

And so comes the next stage…

When to use a third-party OTA

MarketWatch states a fairly obvious advantage OTAs have is that they are instant comparable search tools, and sometimes that’s exactly what travellers want.

“It’s pretty much the only way to compare prices,” Mackenzie told them.

But it doesn’t always mean the traveller will book through them, with even the US travel agent body saying agents should encourage their clients to “click around”.

OTAs also have other advantages in addition to their search and compare functions, and for some travellers who don’t have a favourite hotel or airline brand, the rewards and incentives offering via OTAs can be better than the ones offered by the brand itself.

As MarketWatch pointed out, rewards programs come in many forms, such as the Hotels.com policy that gives members a free night for every 10 they book through the site.

And, sometimes it actually is the cheapest option.

OTAs can often afford to actually apply their own discounts to help seal the deal.

“Because they have such high margins, sometimes they take a few dollars out of the rate they’re supposed to charge the consumer,” Lulla told MarketWatch.

And by bundling up a whole bunch of products like airfares, accommodation and car hire, in the one transaction, OTAs can help sweeten the offering and dip these prices even further.

Consumers ideally, however, should still shop around to do their own comparisons, says Mackenzie.

“The mistake people make is not searching anymore once they find something,” he added to MarketWatch.

“You’re going to get out of it what you put into it.”

Email the Travel Weekly team at traveldesk@travelweekly.com.au

    Latest comments
    1. OTAs spend a lot of money advertising on behalf of the hotels, they deserve a revenue from that effort, hence a margin in the price is fair.

    2. …. of course they didn’t work because they’re not actually hotel direct booking websites… as I’ve said it has to be like a website hotel listing where travellers can see the contact details and direct rates of hotels… otas marketing? loyalty?… those are nothing …as they actually drain otas of funds and resources… what will drive the market crazy over the hotel direct website is -…. ok that one I cannot tell everyone … you have to pay me for that….. bwahahahahaha

    3. one way to beat competition with OTAs – get more direct bookings with Google Hotel Ads. No commissions, simply PPC advertising, desired monthly budget and etc. Many advantages. An depending on integration partner, some of them even provides advertising on Tripadvisor, Kayak, Trivago, Skyscanner on lower rates compared when buying ads directly from the provider. The revenue is high, of course there are many factors. You should have user friendly booking systems, great GMB profile, some additional information on a hotel etc. However these huge OTAs might be great inspiration. I also advise hotels, especially if they have their in-house marketing team, to always check what new things OTAs are offering, since they invest most of their revenue to marketing and advertising. BTW OTAs such as booking.com, Hotels.com, expedia etc. they are also runing Google Hotel Ads and they are marketing on your hotel, and taking all of your direct bookings.

    4. You mean like RoomKey? Or maybe Travelweb? Or, for the airlines, like Orbitz? This model hasn’t worked in the past and won’t work in the future. OTAs 1) have ungodly marketing budgets and 3) are laser focused on the space. Hotel chains will never have the same resources to drive business to a collectively owned OTA and they’ll never be as focused because their main initiative will always, always be brand.com (as it should be). The winning hotel brands are those who learn to work with OTAs rather than fight against them, because they aren’t going away anytime soon.

    5. ….the only way for hotels to win the war on direct bookings is to actually get united and create their own hotel listing website… a website to rival otas…. the page will show lead rates of all hotels and when you click it, it goes directly to the hotels website… phones and email addresses of hotels /which are invisible on otas/ will be bigger to rival that of tripadvisor where you barely see the contact details of hotels paying huge amount annual fee to get travellers to see but never see anyway .. unfortunately too for participating hotels on trip advisor they still have to bid /read: pay more/ for their rates to get displayed and yes they’ll be competing again with the great almighty otas for that… trip advisor is not a site for hotels to get direct bookings… as a matter of fact, recent report confirmed tripadvisor bookings for hotels was a super mega epic fail for all seasons… so my dear beloved hoteliers, what are you waiting for…. the idea i”m giving you right now is actually a solid threat that will send shivers down otas spines…

    6. Interestingly, I can book New York at the Hilton Times Square for less that the hotel’s website! Same with most other hotels too. And I’m a travel agent! Also, we have exclusive airfares not found online which are hundreds cheaper than OTA’s or any other agency for that manner. It’s our Helloworld buying power!

booking.com dara khosrowshahi expedia hotels.com marketwatch ota Priceline travel codex travel tripper

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