Online travel agency models
OTA acts as 24/7 appointed salesman for the hotel.
It can be said that they are one stop solution for all hotel bookings for end
customer.
1. Merchant
Model
The main characteristic of a Merchant
Model OTA is that OTA's
purchase rooms in bulk due to the contract between OTA and hotels to sell base
number of rooms.
The
guest pays the OTA at the time of booking a room, and the OTA afterwards pays
the hotel when the actual stay occurs.
Examples
of OTA's using merchant model are Expedia,
Priceline, Agoda and Getaroom.com. On these websites the hotels obtain a
preferred (direct) listing, and the hotel property is placed above
product sources from other providers.
Beside
the BAR (best
available rate) Merchant
Model OTA also offer additional
promotional rate levels, for hotels to attract more demand. Examples are discounts
for dynamic packages, allowing the OTA to bundle the hotel room together with a
flight or car rental, creating competitive offers.
Advantages
of Merchant model are:
1. Good bargain
power due to bulk purchase leading to higher profit margin.
2. Can select rooms usually preferred by the guest.
3. OTA can package hotel with other offers such as
flight/car.
Disadvantages
of Merchant model are:
1. May not be
preferred by hotel owner due to huge profit margins of OTA.
2. May need bulk investment if contract is prepay payment
to hotel.
2. Agency Model- In this
model, OTA's work on commission basis. Here the guest pays the hotel directly
when the stay occurs and the hotel pays
the OTA commission after
the stay has taken place.
The very well known example of agency model is Booking.com.
Advantages
of Agency Model:
1. No upfront huge capital investment is required
2. Preferred by hotel owners due to more control over
final selling price.
3. As its east to collaborate with many hotels, end
customer gets wider choices.
Disadvantages
of Agency Model:
1. It has less bargaining power for OTA.
2. It has less
profit margins for OTA.
3. Its cannot be
packaged with other offers.
3.Opaque Model: An Internet sales method in which
consumers "bid" an amount they are willing to pay for a room on a
specific arrival date and the third party: Web-site operator matches that bid
with a hotel willing to sell a rooms) at that rate.
Opaque Sites are booking channels and OTA websites where the hotel
remains hidden until after the purchase is complete. The customer sees only the
product category (destination, star rating of the hotel) and the price but not
the brand.
Usually
it doesn't accept refunds, changes or cancellations.
It
is basically a non-transparent discount offer. The sites are called opaque because the supplier remains hidden during the booking process.
This
segment is popular in the travel industry. It is used to sell unsold hotel rooms, airline seats
etc. The pricing
strategy helps
hotels to sell empty rooms without damaging their brand integrity and price
positioning.
It allows the hotel to reach out to a
price conscious audience in addition to their usual target group. An advantage
is the guaranteed revenue the hotel has, as the
reservation can't be modified after purchase.
The
best known Opaque Travel Websites are Priceline and Hotwire.
Many OTAs have also introduced
their own version of Opaque Pricing:
- Travelocity
/ Lastminute / Top Secret Hotels
- Getaroom.com / Unpublished Rates
- booking / Hidden hotel
- GTAHotels.com / Mystery hotel
- hotel.de / hotel Roulette
- HotelsCombined.com / hotel Roulette
- TravBuddy.com / hotel Roulette
- Easyclicktravel.com / Off The Record
- HotelDirect.co.uk / Hidden Gem/ Hotels
- BookIt.com / Mystery hotel
- SuperBreak.com / Mystery Hotels
- Wotif.com / Wot hotel
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