Boosting Bookings

The Pros and Cons of OTA Partnerships for Tours & Activities

Post by

January 18, 2022

The Pros and Cons of OTA Partnerships for Tours & Activities

While many trust traditional travel agents to coordinate each detail of their vacation or weekend outing, millions are turning to OTAs to help manage their travel arrangements. That's why many tourism and visitor attraction-centric businesses join forces with an OTA or two in hopes of boosting sales, expanding their reach, and connecting with customers who may not have heard of their services otherwise.

What is an OTA?

OTA is an abbreviation for online travel agency, which is a web-based marketplace on which aspiring tourists can research and book travel arrangements. These third-party sites allow anyone to easily search for and compare products and services without the aid (or extra costs) of a travel agent. Some of the things one might secure through OTAs are hotel rooms, rental cars, flights, cruises, and more.

The top five leading OTAs (according to a 2020 survey) are as follows:

  2. Airbnb
  4. Expedia
  5. MakeMyTrip

Why do people use OTAs?

Travelers turn to online travel agencies when planning their excursions for a few reasons, but perhaps the most important is the ability to see all of their options in one place. Instead of having to call or visit the websites of several different airlines or hotels to find prices, one can just scroll through a list on an OTA. Besides, OTAs don't limit visitors to just one brand or chain's services; they can see everything that is available, regardless of who offers it, in one place.

It's also not uncommon for OTA users to find affordable package deals that may not be offered anywhere else. These deals often bundle everything needed for a trip — plane tickets, lodging, and maybe a few activities at the destination — at a discounted price.

How do OTAs work?

Online travel agencies typically make a profit in one of two main ways: the merchant model or the agency, or commission, model.

The Merchant Model

If an online travel agency operates according to the merchant model, it purchases a number of a partnering business's goods at a fixed price. Then, the OTA sells those products or services to customers at a marked-up price; this allows both the partnering business to earn the money owed and the online travel agency to make a profit.

The Agency (Commission) Model

Under the agency model, any business that has partnered with an online travel agency is paid directly when a customer reserves its services. When the booking is completed, the OTA receives a commission for the sale. This tends to be the preferred model for partnering businesses, as it eliminates the need to wait for payment from a third-party distributor; they receive their cut directly, which keeps things simple.

All About OTA Partnerships

While larger corporations don't necessarily need the help of a third-party platform like an online travel agency to boost business, smaller or independent organizations may find that an OTA is just what was needed to take them to new heights. An OTA partnership isn't something a hotel, tour, or other tourism company can immediately jump into, however. Before partnering with an OTA, a few steps must be taken.

First, a business must have a website with an online booking service; since OTAs are web-based, this is a very important step. Secondly, the business should identify its target audience. For the partnership to be successful, the online travel agency with which the business joins must appeal to the same type of traveler. For instance, if a tour and activities company based on family entertainment wants to bring in more customers, it wouldn't be wise to join forces with an OTA most frequently used by solo travelers.

Finally, a business should find out what kind of benefits an OTA can offer to its partners. Does it operate according to a model that aligns with the company's business strategies? Does it offer analytics, insights, or other marketing tools that can help push the company forward? Can it integrate with the booking platform smoothly? This isn't an exhaustive list, but these questions provide a sufficient starting point for any business considering pursuing an online travel agency partnership.

Pros of OTA Partnerships

  • Reduced spending on online marketing strategies. Though any business partnering with an online travel agency will still need to invest in its marketing strategy, the OTA's investment in its own advertising and marketing efforts will bring more traffic to the business and its website.
  • More access to analytics and insights. Many OTAs provide partnering businesses with tools like competitive insights, market data, and traveler preferences that may be difficult or costly to obtain otherwise. This information can help plan future marketing strategies and increase customer satisfaction.
  • Access to unbiased reviews. It's often difficult to find unbiased opinions on lodging, travel, or tourism businesses' services. Fortunately, the honesty of OTA reviews encourages prospective customers to book with more confidence.

Cons of OTA Partnerships

  • Commission. An OTA will charge a commission on every sale, usually somewhere between 10 and 15 percent of the cost.
  • Maintaining an online presence is still necessary. It may be tempting for a business to neglect its website and online booking tools after partnering with an OTA, but that is an unwise decision. Any tour, activity, or lodging service will still need to maintain its previously existing website.
  • Potentially restrictive terms and conditions. Unfortunately, partnering with an online travel agency means a business must forfeit its booking management policies (like cancellation fees, etc.) and surrender to the terms and conditions established by the OTA.

Should a tours and activities business partner with an online travel agency?

Ultimately, the above question is one only a business can answer for itself. However, the use of an OTA can be beneficial in expanding a product, good, or service's reach. That fact alone makes it a worthwhile pursuit for many owners and managers of a travel-based business or service. Since a business must find an OTA or two that align with its goals and practices, it's advisable, however, that thorough research be conducted before a decision is made.

Get started!
No monthly fee, no setup fee