In the 1990’s, online travel agencies (OTAs) threw a wrench in the hotel booking process by allowing travelers to compare prices across multiple hotels, inspiring consumers to book rooms through third-party sources rather than directly through hotels. These bookings sites tacked on a hefty transaction fee, but the convenience of being able to search multiple options in one place made the extra charges worthwhile for the traveler.
Fast forward two decades and there is a new trend that property owners, managers, hoteliers, and other members of the travel space should know about. The rise of metasearch sites like Kayak and Bing – which allow travelers to not only compare prices across hotels, but also across OTAs – has intensified the rivalry between booking sites, leaving companies like Expedia and Orbitz fighting for repeat customers.
But how are these brands creating this repeat traffic?
How to Create Loyalty Among OTAs?
To match Web competitors and increase brand loyalty, “it’s in the interest of online travel agencies to keep upping the ante,” said Clem Bason, CEO of DealBase.com.
In order to influence customer fidelity, OTAs have begun branching into the rewards business with the hope that additional incentives will keep travelers from straying to other booking sites. This is a tactic that hotels have employed for a long time. And now, OTAs are hoping that offering a rewards program will bolster consumer loyalty, the way it did for hotels.
Potential Negatives for OTAs
Despite the fact that OTAs are trying to build loyalty with travelers and increase the number of bookings taken on their third-party sites, there could be problems that pop up thanks to programs like Expedia Rewards and Orbitz Rewards.
Much of the advertising dollars spent by hotels go towards advertising on these OTA sites, but ultimately these properties would prefer to take bookings on their own website, as opposed to the third-party OTA site. If properties are only receiving reservations through the third party sites (and are paying commission fees ranging from 15 to 25%, then these properties will be more likely to find other advertising avenues that will direct more travelers to book directly on a property website.
Traditional Programs vs. OTA Loyalty Programs
The logic behind traditional loyalty programs is pretty basic – hotels attract repeat business by promising rewards like free stays, complimentary amenities and even frequent flier miles. The more often a traveler stays at a hotel or with a hotel brand, the more rewards he or she will earn. These loyalty programs generally benefit business travelers the most, as they stay more often on the company dime and apply rewards to vacation expenses.
OTAs, on the other hand, target consumers looking to rack up and redeem points more quickly than they would through a hotel program according to Expedia CMO and Senior Vice President of Global Marketing David Doctorow. OTA program members can earn rewards by booking stays at eligible hotels, regardless of the brand they choose, allowing for increased earning potential.
To learn more about the steps being taken by OTAs to increase loyalty among travelers, click here.