SEATTLE—For hoteliers, a good distribution strategy is a crucial part of hotel operations—but the landscape can be murky. Brand.com, OTAs, metasearch, powerhouses like Google—there are a lot of players in the field, and it’s only getting more crowded with home-sharing platform Airbnb taking aim at online travel agencies as it shifts its focus to include boutique hotel properties. But Expedia Group Inc. released a study that finds that OTAs are still a valuable channel for hotels.
“The study underscores that Expedia consumers are of high value to the travel industry, a point that has at times been debated,” said Abhijit Pal, head of research for Expedia. “OTAs not only drive incremental guests, but high-value guests who add value to almost every aspect of the travel ecosystem.”
The company partnered with Oxford Economics to analyze hotel guest spending, segmented by guests who booked part or all of their trip using an OTA vs. non-OTA guests. More than 98,000 trips were analyzed. The results? Travelers who booked via an OTA spent more per trip than non-OTA guests across all categories, including food and beverage, retail, recreation and entertainment, and transportation, regardless of their reason for traveling. According to the results, more than one-fifth (21%) of travelers used an OTA in trip planning and booking, and OTA bookers stayed 8% longer and spent nearly 18% more per trip than non-OTA bookers.
The OTA premium—a term coined by Oxford Economics—refers to this variance between the OTA guest and non-OTA guest. According to the findings, the largest spend difference can be found in the retail category: There, the OTA premium is nearly 26%, followed by transportation and recreation and entertainment, both upwards of 20%.
“Loyalty marketers across travel segments, including retail, transportation, food and beverage and entertainment, can use these insights to attract and market to this highly valuable customer demographic during various touchpoints throughout the travel journey,” Pal said. “For hotel loyalty marketers specifically, leverage pre-arrival and on-property communication channels with OTA bookers to offer promotions for any on-site offerings and services.”
The company noted that the premium is partly attributable to the typically longer length of stay for OTA bookers, but it doesn’t correlate to party size.
Oxford also found that OTA bookers tend to be slightly younger than non-OTA bookers, with a higher concentration in the 25-to-54 age cohort, by nearly 10 percentage points, and no notable variant from household income. “Millennials are traveling more than any other generation (35 days per year); eight in 10 are looking to explore the outdoors and opt for off-the-beaten-path destinations,” Pal said. “Millennials value exploration, and OTAs provide them with a variety of choices in an easy-to use platform.”
Acknowledging that there’s more competition in the space these days, Pal said, “Competition is great for consumers—allowing them more ways to book a travel experience. As an industry, competition keeps us all focused on improving our offering, making sure we deliver on our brand promise and constantly evolving and improving our platform.”
And, he added, he’s not worried about OTAs’ value proposition. “OTAs provide consumers a cost-effective and convenient way to explore and book travel,” he said. “The ability to book hotel, air and a car on one easy-to-use site—as well as explore a variety of pricing options—provides today’s discerning consumer, who is used to comparison shopping, the convenience they crave.” HB