5 Myths About Online Travel Agencies
We've investigated the stereotypes to debunk some of the most common misconceptions about OTAs.
The role of online booking sites is changing, and many commonly held beliefs have become outdated. (Getty Images)
With a dizzying array of discounted vacation packages floating across the web, securing a bargain seems like a simple task. But with online travel agencies like Expedia reportedly tweaking search results to promote certain hotel listings and a rising number of book-direct initiatives from major brands such as Marriott and Hilton, price shopping isn't always easy or straightforward. To add fuel to the fire, metasearch sites and apps, such as Google Hotel Finder and Hopper, showcase rates from a variety of hotels and airlines (though some companies do not disclose prices), making it hard for savvy bargain hunters to know if they're netting the best deal. And while there are key advantages of going straight to the source and unique benefits of using an online booking site, the reality is the role of OTAs is changing, and many commonly held beliefs have become outdated. U.S. News spoke with industry experts to dispel common OTA myths.
Myth: There are myriad OTAs to choose from.
While hotels and airlines have been duking it out with online booking sites for years, there's been increasing consolidation among OTAs, explains Clem Bason, CEO of hotel booking site goSeek. While Expedia has acquired Hotwire, Travelocity, Hotels.com and Orbitz Worldwide, Priceline owns Booking.com and Kayak, among other sites. Yet in spite of increasing consolidation among booking sites resulting in fewer online travel agencies, there is a silver lining for budget-minded travelers: There are still cost-effective accommodation options. According to Bason, the rise of vacation rental sites such as HomeAway (owned by Expedia) and home sharing networks like Airbnb translates to "even more low-cost [lodging] options for consumers."
Myth: You'll always get the most competitive rates with an OTA.
While we often hear about attractive promotions on online booking sites, they are actually not the only sources to snag a good deal on airfare and lodging . "It's why people originally went to [OTAs]," says Steve Cohen, the vice president of research and insights at MMGY Global, a travel and hospitality marketing company.
"OTAs are paid based on a percent commission, so while they want to advertise low prices, they want to sell at the highest price possible to make the most money," Bason explains. In fact, online travel companies charge travel brands hefty commissions for bookings, typically varying from 10 percent to 30 percent. "[OTAs] use a series of tricks to make you think you're getting the best price, when in fact you often aren't. And, hotels are now beginning to offer lower prices if you book direct with them," Bason adds. That said, there are still benefits of making reservations with OTAs, including securing spur-of-the-moment flight and hotel deals or saving money by bundling costs, such as a car rental, tours and a hotel into a fixed package rate. Ultimately, the consumer should never assume that they're getting the best rate with an OTA, Bason cautions.
Miriam Cross, a staff writer at Kiplinger's Personal Finance, shares a similar perspective. Prices available for direct bookings and through online travel agencies are similar due to "rate parity" agreements, she notes. However, if you're booking an international getaway, you can often secure better rates by booking an itinerary with an OTA, since booking sites have the ability to "piece together different routes through different airlines," which can help you net significant savings on airfare that would be difficult to get on your own, she says.
Myth: You can collect lucrative points and perks with an OTA rewards program.
While awards are available through OTA loyalty programs (such as Expedia+ Rewards and Priceline Awards), they're only worth investing in "if you're not particularly loyal to a certain hotel," Cross says. Whether you join should hinge on how often you travel, Bason says. "If you're a very frequent traveler and you like staying in the same brand, I'd use that hotel's loyalty program," he says. While programs available through Expedia and Orbitz can offer you the equivalent of money or points back, with a loyalty program you can get room upgrades and other generous perks, he adds. It's also important to keep in mind, when you book through an OTA, you won't get the valuable rewards points affiliated with a hotel's loyalty program.
Myth: You'll receive poor customer service by making your reservation through an OTA.
Despite the widespread belief that guests who book through online booking sites will receive subpar service, such as a less-desirable room at check-in or fewer freebies, this isn't always the case, Bason says. With growing consolidation, many hotels (and particularly boutique independent hotels) run a high risk if they don't treat you well for booking through an OTA. They also want to foster brand loyalty. "The OTAs are generating too much of their volume. They can't afford to have this practice and risk alienating them," Bason says.
Meanwhile, Cross says, "If you're more concerned about the experience [than price], it's better to book directly" so you won't have to worry about calling multiple sources for different components of your trip. That said, according to Cohen, in past MMGY focus groups, participants consistently reported feeling that they would receive better customer service should a problem occur, particularly a problem with the reservation, by booking directly with a hotel.
Myth: OTAs are only useful for landing a deal.
According to findings from MMGY Global's 2016 Portrait of American Travelers study, the role of OTAs has drastically changed over time. While consumers used to turn to individual hotel sites for travel inspiration before booking their stay with an OTA to secure the best rates, the trip-planning process has started to shift. The study found 32 percent of travelers prefer to book directly, while 31 percent prefer booking with an OTA. Meanwhile, only 18 percent of the survey's participants reported visiting individual hotel sites for inspiration, while 21 percent of participants reported consulted OTAs for trip inspiration. "We've seen that trend [flip-flopping on the path to purchase] for the past couple of years," Cohen says.
While major hotel chains are going to become better at promoting direct bookings, the OTAs are going to get better at promoting certain hotels through images, reviews and descriptions, he adds. "The OTA really needs to do that to get the consumer to keep coming back and back." While agencies used to offer a one-stop shop, these days, listings are manipulated, prompting consumers to question whether they're seeing the best deal, he adds.
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