VANESSA S. BANIAGA
Abstract
The
rise of Online Travel Agencies (OTAs) has dramatically changed the hospitality
and tourism industry. Hotels, resorts, and tour providers that once relied on
traditional travel agents and walk-in bookings now increasingly use digital
platforms like Booking.com, Agoda, Expedia, and Airbnb to reach travellers
worldwide. This shift has brought significant benefits, including a larger
market reach, more bookings, and access to data-driven tools. However, it has
also created new challenges. High commission fees, limited control over guest
relationships, intense price competition, and overreliance on third-party
platforms have become everyday concerns, particularly for small and independent
businesses. This study examines OTAs as both an opportunity and a risk,
highlighting how they can drive growth while also introducing strategic
vulnerabilities. By exploring real-world examples, industry data, and
operational effects, this paper aims to offer a balanced view of the business
impacts of OTAs. It aims to help hospitality and tourism professionals navigate
this evolving digital landscape with greater clarity and confidence.
Keywords:
Online travel agencies, hospitality, tourism, double-edged sword
Introduction
In
recent years, the travel and tourism industry has undergone a profound
transformation, one driven mainly by the rise of digital technology. Today, the
way people dream about, plan, book, and experience travel looks completely
different from just a decade ago. And right at the centre of this change are Online
Travel Agencies (OTAs)—platforms like Booking.com, Agoda, Expedia, and
Airbnb—which have redefined how the world moves.
For
modern travellers, OTAs have become a one-stop shop for planning adventures,
whether it’s a quick weekend escape or a month-long journey across continents.
These platforms offer more than just convenience; they provide real-time access
to prices, reviews, and a wide variety of accommodations and experiences. From
budget backpackers to luxury seekers, travellers now expect transparency,
instant booking, and a seamless experience—all of which OTAs deliver with
impressive efficiency.
But
while these digital platforms have empowered travellers in countless ways,
they’ve also reshaped the way hospitality and tourism businesses
operate. For hotels, resorts, inns, hostels, and even homestays, OTAs present
both opportunity and challenge. On the one hand, they've levelled the
playing field, giving small, independent properties a chance to be discovered
by international guests. A family-run bed-and-breakfast in Baguio or a
beachside cottage in Siargao can now be seen (and booked) by travellers from New
York, Tokyo, or Berlin—all thanks to being listed online. Such global exposure
would have been unimaginable for many properties just a generation ago.
On
the other hand, this new digital reality comes with strings attached.
Commission fees, reduced direct bookings, stiff competition, and limited control
over guest interactions are just a few of the trade-offs that business owners
must navigate. For some, OTAs are a powerful ally; for others, they feel like a
necessary evil.
This
blog aims to take a closer, more balanced look at the business implications
of OTAs within the hospitality and tourism sector. We'll explore the real
benefits these platforms offer, the challenges and risks they present, and how
businesses of all sizes—from boutique hotels to large chains—are learning to
adapt, compete, and thrive in a world where digital presence is everything.
Whether
you're a student of tourism, a hotel manager, or an entrepreneur in the travel
space, understanding the strategic role of OTAs is crucial for long-term
success in today’s experience-driven, globally connected marketplace.
The Pros: Benefits and Possibilities of OTAs
for Travel and Hospitality Companies
Online
travel agencies, or OTAs, have changed the hospitality and tourism industries
for many people today. They are crucial to the global travel market for small
and independent businesses. They offer exposure that once required a
significant investment, strong connections, or a marketing team. Whether you
run a boutique hotel in the city or a cosy beachfront homestay on a private
island, OTAs help level the playing field. They enable travellers from around
the world to find even the most remote spots. So, what makes OTAs such valuable
partners? Let's examine the actual benefits they provide.
2.1.
Global Reach and Increased Bookings.
One
of the most exciting benefits of being listed on an OTA is the quick access to
a global audience. Travellers worldwide can now discover even the most hidden or
modest properties through these platforms. Think about a small coastal
guesthouse in El Nido, Palawan, or a mountain lodge in Sagada. Once listed on
sites like Booking.com, Agoda, or Airbnb, these locations can attract guests
from Germany, Japan, Australia, the United States, and nearly anywhere else
with internet access.
Statista's
2023 study showed that OTAs accounted for more than 60% of all hotel bookings
worldwide. That figure highlights the dominance and importance of these
platforms.
2.2.
Cost-Effective Marketing Tool
Marketing
can be costly and daunting, especially for smaller businesses that lack a
dedicated digital team or substantial advertising budgets. Building a website,
running paid ads, managing SEO, and staying active on social media all require
time, skill, and money. This is where OTAs offer significant advantages.
Businesses
can effectively "piggyback" on the extensive global marketing efforts
of platforms like Expedia, Agoda, and Airbnb. These OTAs invest heavily in
online advertising, search engine rankings, travel influencer partnerships, and
promotions. Your listing is marketed to millions of potential travellers at no
additional advertising costs. For many business owners, this saves both money
and time.
It's
a win-win: you focus on providing a great guest experience while the OTA
manages the traffic and exposure.
2.3.
Access to Data and Insights on Guest Behaviour
Knowledge
is valuable. OTAs not only facilitate bookings but also provide valuable
insights into how and when guests book, how long they stay, the types of rooms
they prefer, and their sensitivity to price changes.
This
information enables you to make informed choices, such as adjusting your prices
during slow periods, preparing for increased demand, and tailoring your offers
to the types of guests you attract. It transforms raw data into actionable
business strategies.
2.4.
Building Trust with Guest Reviews
One
of the most significant advantages OTAs provide is their built-in review
system. Guest reviews offer potential travelers an honest view of what to
expect, promoting transparency and accountability that builds trust.
Seeing
genuine reviews from everyday people helps guests feel more comfortable
booking. A steady stream of positive reviews can significantly improve search
rankings and conversion rates for businesses. Properties with higher ratings
often rank higher in search results, are featured more prominently, and receive
badges such as "Traveller Favourite" or "Highly Rated
Stay."
In
a market where trust and credibility matter, this can give smaller,
lesser-known properties a significant edge.
2.5.
Automation and Operational Efficiency
Running
a hotel or restaurant is a 24-hour task. Managing room availability, pricing,
and guest communication can become overwhelming quickly, especially during busy
seasons. OTAs help lighten the burden by integrating with systems like Property
Management Systems (PMS) and Channel Managers.
This
means that if someone books a room on one site, your calendar updates instantly
across all platforms, with prices and availability changing in real-time.
There's no need for manual updates or worrying about double bookings.
Automation
reduces human error, enabling you to focus more on what matters most: your
guests. You can focus more on improving services, training staff, or simply
adding personal touches that make a stay unforgettable.
3.
The Cons: Difficulties and Hazards of Dependence on OTAs
Online
travel agencies (OTAs) offer hospitality businesses numerous benefits,
particularly in terms of visibility and global reach. However, they also come
with some real and sometimes unpleasant drawbacks. The issues faced by many
small to mid-sized properties can seem as significant as the benefits. Here are
some common and serious concerns that arise from relying too heavily on
OTAs:
3.1
High Commission Fees
One
of the biggest problems hotel owners and resort operators face is the high
commission that OTAs charge for each reservation. These commissions usually
range from 15% to 30%. This can significantly reduce the actual revenue a
property generates from each guest.
It
becomes even more frustrating when most bookings happen through these
third-party platforms. Owners feel like they are doing a lot of work but are
not getting the full rewards.
3.2
Lack of Direct Customer Loyalty and Brand Dilution
The
loss of direct relationships with guests is another hidden cost of using OTAs.
When guests book through OTAs, their loyalty often lies with the platform
rather than with the hotel.
As
a result, guests often return to the OTA for their next trip, rather than
forming a connection with the hotel. This makes it more challenging to
establish a strong brand identity and foster customer loyalty. Even if a guest
has a great experience, they might forget the property's name and only remember
the OTA they used for the booking.
This
lack of direct interaction removes significant chances to provide personalised
service, gather feedback, and turn satisfied guests into repeat customers
through loyalty programs or direct booking benefits.
3.3
Intense Competition and Price Wars
OTAs
display listings side by side, sorted by price, reviews, or popularity. This
creates a highly competitive environment. Many properties feel the need to
lower their prices, offer constant deals, or add extras just to keep up. While
customers may benefit, the company's financial health often suffers as a
result. Even as operating costs rise, consistently low prices can reduce the
value of the service and make it hard to justify price increases.
Moreover,
guests become less willing to pay full price in the future once they get used
to discounted rates. This creates a cycle that is hard to break.
3.4
Restricted Authority Over the Client Experience
When
guests make a reservation through an OTA, the terms often favour the platform's
rules over those of the resort. Business owners usually have limited control
over handling complaints, refunds, or cancellations.
Suppose
the OTA allows last-minute cancellations or refunds due to its policies. In
that case, the business must comply, which often leads to lost revenue, even if
the hotel has a non-refundable policy.
Even
worse, a single negative review on the OTA platform can hurt the property's
visibility and reputation, regardless of who is at fault. A few negative
reviews can significantly impact future bookings, as many travellers rely
heavily on reviews when choosing hotels.
3.5
Excessive Reliance and Prolonged Risk
Finally,
becoming overly dependent on OTAs is perhaps the most dangerous drawback. For
some hotels, especially smaller or newer ones, OTAs can account for 70% to 90%
of reservations. This creates a fragile business model that can be easily
disrupted if the OTA suddenly changes its algorithm, raises commissions, or
alters its policies.
Case
Study: The Philippine Hospitality Sector and OTAs
The
tourism industry in the Philippines has experienced significant growth in
recent years, primarily driven by the rise of online travel agencies (OTAs)
such as Agoda, Booking.com, Expedia, and Airbnb. From the beautiful white sands
of Boracay to the laid-back surf town of Siargao, the historic charm of Cebu,
and the lush hills of Bohol, these platforms have opened new doors for the
travel industry in the country.
OTAs
have transformed the landscape for many small business owners, especially those
running boutique inns, cozy homestays, and family-operated beach resorts. Now,
with just a few clicks, thousands of potential guests can discover their
properties, which previously relied on walk-in visitors, word of mouth, and
occasional blog features. These hidden gems are in tropical spots throughout
the Philippines and are accessible to digital nomads, eco-tourists, foreign
backpackers, and solo travellers planning spontaneous trips. Small businesses
can now reach global markets without the burden of high advertising costs or
agency partnerships, all thanks to the visibility that OTAs provide.
Take
Maria, a homestay host in Siargao. Before she listed her property online, she
had mainly relied on seasonal guests and local recommendations. After joining
an online travel agency, she began receiving bookings from tourists in South
America, Australia, and Europe. Her once-quiet four-room beachfront cottage is
now almost fully booked year-round. This change is echoed in many stories
across the nation.
However,
this success comes with challenges. As more properties crowd these online
platforms, competition becomes more brutal and often unfair. Many small
property owners have noticed a troubling trend: OTA algorithms usually favour
larger hotels and well-established accommodations with hundreds or thousands of
reviews.
Regardless
of the quality of their service, these top listings often dominate the first
pages of search results, pushing smaller or newer properties down the list.
As
a result, many small business owners in the hospitality sector feel they are
facing significant hurdles. Their visibility on OTAs remains limited,
regardless of how welcoming, clean, or appealing their rooms are. Additionally,
high commission fees, typically ranging from 15% to 30% per booking, cut into
their already narrow profit margins, adding to their frustrations.
In
response, many entrepreneurs are taking charge of their situation. With help
from tech-savvy partners, local developers, or free platforms, they are
learning to build direct booking websites. With their websites, they can
provide potential guests with a closer look at their establishments,
highlighting not just room rates but also their culture, community, and unique
stories.
To
attract more visitors to book directly, many owners now offer exclusive perks,
such as complimentary breakfasts featuring local ingredients, free airport
transfers, welcome drinks, or guided tours to nearby attractions. These extras
not only enhance the guest experience but also strengthen the bond between
hosts and travellers—an aspect often overlooked by online travel agencies.
Moreover,
these small businesses are starting to see social media marketing as a valuable
tool. By sharing behind-the-scenes glimpses of daily life, introducing staff
members, showcasing guest reviews, and posting beautiful photos of sunsets or
island adventures on platforms like Facebook, Instagram, and TikTok, they can
humanise their brand and build loyal online communities.
Despite
these challenges, many local hosts remain optimistic. Rather than viewing OTAs
as opponents, they consider them a starting point— a way to gain visibility,
connect with first-time visitors, and ultimately turn those connections into
lasting loyalty through direct interaction. They understand that to succeed in
a digital tourism landscape, they must cultivate their online presence while
staying true to the warm, welcoming spirit of Filipino hospitality.
In
this changing environment, tourism in the Philippines is about people just as
much as it is about technology. It's about individuals like Tony in Panglao and
Maria in Siargao, who continually innovate and dream of sharing their little
piece of paradise with the world on their terms.
Strategies
for Hospitality Businesses to Maximise OTA Benefits
To
create a balanced OTA strategy, hospitality and tourism businesses
should consider:
5.1.
Implementing a Direct Booking Strategy
- Offer
lower rates or exclusive benefits on official websites.
- Use
email marketing to turn OTA customers into repeat direct bookers.
- Run
loyalty programs to build brand affinity.
5.2.
Optimising Listings for Visibility
- Use
high-quality photos and accurate descriptions.
- Respond
quickly to reviews and questions.
- Maintain
competitive pricing using dynamic pricing tools.
5.3.
Diversifying Booking Channels
- Combine
OTA listings with social media marketing, Google Travel
integration, and collaborations with local travel agencies.
5.4.
Investing in Technology
- Use
channel managers and cloud-based PMS to sync OTA inventory
with in-house systems.
- Analyse
booking trends to forecast demand and set flexible prices.
6.
Future Outlook: Are OTAs a Long-Term Partner or Temporary Solution?
The
role of OTAs will continue to change. While some believe that direct bookings
will increase due to brand loyalty and app usage, OTAs are likely to stay
dominant, especially for international travel.
New
technologies, such as AI travel advisors, voice search, and metaverse travel
previews, will be incorporated into OTA platforms, making them even more vital
for reaching tech-savvy travellers.
Additionally,
major OTAs are moving into experience bookings, insurance, and all-in-one
travel platforms, which will further solidify their place in the travel
industry.
Conclusion:
Striking the Right Balance in a Digitally Disrupted Industry. Online Travel
Agencies (OTAs) have become essential in today's hospitality and tourism scene.
For many businesses, especially small, independent, or remote ones, these
platforms provide access to global markets. They make it easier to connect with
travelers, streamline operations, and gain visibility that once required large
marketing budgets. In this way, OTAs have opened up the industry, allowing even
the smallest beach hut or mountain lodge to be seen, booked, and reviewed by
guests from around the world.
However,
OTAs come with risks that must be considered. High commission fees eat into
already tight profit margins. Reduced direct guest interaction weakens brand
loyalty, and overdependence exposes businesses to sudden policy changes. Many
hospitality providers find themselves in a tricky balancing act. The same
platforms that help them grow can also limit their freedom and control.
Therefore,
it is no longer enough to list a property on an OTA simply and hope for
success. Hospitality businesses need to see OTAs not just as saviours or threats
but as strategic partners, just one part of a broader business model. The most
successful players in the industry use the exposure and reach of OTAs to
attract new guests while also focusing on direct booking channels, personalised
service, and technology that supports long-term sustainability.
Creating
an engaging website, offering loyalty programs, crafting memorable guest
experiences, and using data analytics to understand traveller behaviour are ways
businesses can lessen their dependence on OTAs while staying competitive. The
goal is not to abandon these platforms, but to utilise them thoughtfully,
integrating them into a broader digital strategy that fosters both short-term
growth and long-term resilience.
Ultimately,
the future of hospitality is about finding balance: embracing innovation while
keeping identity, reaching out to the world without losing connection, and
leveraging platforms without becoming overly reliant on them. OTAs will
continue to influence how people travel, but with an innovative and intentional
approach, hospitality businesses can lead rather than merely respond to change.
References
- Statista
(2024). Global Hotel Booking Statistics
- UNWTO
(2024). Tourism Innovation and Digital Platforms Report
- Deloitte
(2023). Digital Transformation in Hospitality: Strategy vs. Survival
- Booking.com
(2023). Partner Hub: Managing Your Listings
- Philippine
Department of Tourism (2024). Digital Tools and Trends in Local Tourism
- Expedia
Group (2023). Annual Travel Industry Insights Report
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