The Booking Battle: OTAs Break Into the Loyalty Market
Facing steep competition from fellow booking websites, online travel agencies have been experimenting with travel rewards as a means of incentivizing consumer loyalty -- at the expense of straining relationships with the hotels with which they partner.
In the 1990s, 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 with hotels. Travelers' desire to score the best deal has led to a greater demand for companies like Expedia, Orbitz and Hotels.com, which cull the lowest rates from multiple hotels. And while online booking sites once tacked on hefty transaction fees, today those fees have been eliminated, making planning and purchasing trips through intermediaries all the more enticing for consumers. As a result, OTAs are poised to build brand loyalty, while hotels are at greater risk of losing prospective guests to competing properties.
Now, the dynamic has shifted once more. 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.
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.