Online travel agencies (herein referred to as OTAs) are thriving. Brands like TripAdvisor, Booking.com and Expedia currently dominate the online travel market, acting as a middleman between prospective travellers and travel-related products like flights, cruises, holiday packages and hotel rooms.
In the US, the share of OTAs in the online booking market has risen to around 40%, while in China, OTAs accounted for nearly 70% of total online travel bookings in 2019. It’s no surprise then, that everyone who’s anyone wants a slice of the pie. Amazon and Revolut have both entered the booking market, but it’s Google whose success has been most profound thus far.
After all, where do most people start searching for their next travel or hospitality experience? You got it; Google. The digital giant is the mother of all metasearch platforms and the key player to watch over the next few years. It’s not only hotels and flights they’ve got their sight on; now, they’re turning their attention to visitor attractions.
In 2011, Google launched Flight Search following its acquisition of ITA Software. They’ve since gone on to dominate the flight search market and one in ten frequent flyers in North America now start their airfare shopping on Google Flights, according to a survey of nearly 2,500 frequent travellers. That figure doubles if you ask younger travellers (under 32 years old) who are more than twice as likely to start their search process with Google Flights.
In early July 2015, Google expanded its travel remit and added Book Direct for hotels, mirroring TripAdvisor's instant booking feature, which had been in place for a year previous. By doing so, the tech giant made it possible for visitors to book a hotel room without ever leaving Google.
More recently, Google and other silicon valley tech giants like AirBnB have attempted to tap into the experience economy, launching online booking services for attractions worldwide. Google is currently piloting a new program tailored for tours, activities and attractions called ‘things to do.’ Under the scheme, Google or one of its approved integration partners will take potential consumers directly to the attraction’s online booking platform via an ‘Official Site’ button. In exchange, Google can charge a commission, as many existing OTAs do currently.
As many experience bookings originate from Google search, operators must keep tabs on how Google behaves regarding the marketing of tours, activities & attractions, particularly given the knock-on effects it could have on Google’s PPC platforms. It’s reasonable to expect that as Google expands its entry into the booking economy, more weight will be given to paid listings, whilst organic SEO will decline in importance. Such patterns were observed when similar changes were made to search tools in the hotel industry, resulting in a decrease in organic visibility that rattled hoteliers and OTAs alike.
While OTAs and Google have many benefits, like increasing your attractions visibility and exposing you to large audiences of prospective guests, there are two significant trappings of an OTA style partnership that regularly catch operators out; commission and price parity.
Both have been acutely experienced in the hospitality industry, where OTAs currently represent 40% of the global booking market. Let’s see how they operate in practice:
When guests reserve a stay via an OTA, hospitality providers pay them a commission, which can range from 15 to (a whopping) 30 per cent of a booking. It’s like paying a finders fee, and in the hotel industry, it’s a well-embedded model – before the rise of online travel agents, hotels would have paid high street agents commission in a similar way.
However, because OTA usage is becoming so prevalent, it’s becoming increasingly difficult for hotels to compete for bookings directly. OTAs effectively divert traffic away from hotel websites, and once they’ve started to generate a substantial portion of bookings, use their success to increase commission payments for many properties.
Along with increasing commission, OTAs often implement a price parity policy with properties or service providers using their booking platforms. This means that once a provider agrees to a price and it’s listed on an online booking site, they cannot then compete with that price by listing a lower booking price on their own website. Sometimes OTAs even request price exclusivity – guaranteeing that the best rate is found via the booking agent rather than going direct.
Learning from the hotel industry, attraction operators need to find the balance between leveraging the benefits of OTAs (namely increased visibility) and retaining control of their admissions (through a best price policy). To do so, operators need to let their owned channels lead and build a marketing strategy that drives and retains direct booking traffic.
Doubling down on your marketing efforts makes your attraction less dependent on the visibility of third party sites and ensures you can’t be out-competed on your own product. After all, if an OTA secures cheaper admissions rates than you offer directly due to an exclusivity contract, finding a new way to add additional value for guests is near impossible.
A good solution is to limit OTA involvement to a set percentage of your ticket sales and retain the rest for direct custom. At the same time, invest in your owned channels to ensure that customers experience the same (or better) benefits offered by OTAs when they book directly. Now is the time to consider value adds like exclusive experience packages and investing additional resources into developing an efficient mobile site or app. The aim is to become the one-stop-shop buyers are looking for.
Numerous studies have assessed the factors that affect customer use of OTAs and identified five key drivers:
Price Advantage: As one would expect, perceived value heavily impacts a prospective guest’s choice of booking platform. Many consumers believe OTAs offer the best rates in the market, which in part can be attributed to the price exclusivity deals mentioned above.
Convenience: OTAs have worked hard to optimise their platforms and deliver a high search accuracy, combined with an efficient, convenient booking system that makes purchasing tickets effortless for guests.
Serviceability: Lee et al. (2017) found that serviceability impacts customer satisfaction, which, in turn, influences customer loyalty and attachment to the brand. The best OTAs offer a seamless experience across the web, mobile search and their apps to ensure guests get quality service no matter which channel they use.
Experience quality: Interestingly, studies have shown that better value propositions for consumers come from the OTAs features and channels and the quality of the physical services or facilities that are booked. If customers believe high-quality experiences are listed on OTA sights, they’re more likely to utilise their services.
Trust: Consumers value having the ability to compare prices on OTA sites and read reviews from previous guests.
You don’t have to be Google or an OTA to offer guests the one-stop booking experience they want. Digital tools, like mobile apps, can provide prospective visitors with all the tools they need to convert into excited guests.
From pricing to accessibility requirements and upcoming event information, you can provide answers to common questions, address buyer concerns and offer a convenient, direct booking experience via a 100% owned channel. Whatsmore, tools like mobile apps create opportunities for you to add value across the end-to-end guest journey, meaning you no longer have to focus solely on admissions to hit your revenue targets. Instead, you can unlock untapped revenue from on-site activities, using the app to share exclusive offers and upgrades that encourage guest spending during their visit.
At Attractions.io our customers regularly report average transaction increases of as much as 42% as a result of implementing mobile food ordering and direct messaging in their mobile apps. One leading UK Theme Park even saw their initial investment returned 16 times over just two months after adopting our solution!
Even if you can’t get away from using an OTA to drive awareness or generate the initial for the booking, you can reclaim guests with the right marketing mix. A mobile app helps you deliver a friction-free, personalised experience that turns day visitors into loyal brand advocates. And once you’ve captured their attention, you can use the app’s messaging tools to retarget guests after they’ve left, request reviews and share exclusive returner offers to encourage revisitation via your owned channels.
OTAs are popular with consumers, and as big players like Google expand their metasearch capabilities to include experience bookings, they are set to become an even bigger presence in the attractions industry.
By developing a strategic marketing plan that combines limited OTA usage with tactics designed to drive traffic to the channels you own, you can remain in control of your admissions process and leverage the benefits of third-party platforms without being exposed to third party pressures.
Take control of the end-to-end guest journey with a mobile app that drives revenue across your owned channels and free’s you from reliance on guest volume by creating revenue opportunities across the entire guest experience.