World of Online Travel Industry

It all began with a simple assignment I received as part of my work and soon it turned into an addiction which kept me awake few nights. Now you might be wondering what earth shattering truths to be uncovered in an industry which is used by millions. In fact that’s what I expected when I started researching on this topic but as learnt more, the truth became more and more interesting yet illusive.

Oh, those good old days!

If you are born in pre-dot-com bubble then you might recollect some memories of running through telephone directory to find a local travel agent. Researching a trip was done in the library, in the travel sections of a local newspaper, and in travel agencies. Air travels were specially rare in those days unless you are born in a very affluent family or were holding a top managerial position in a large corporation. Most travels were limited to rail or bus journeys in the most part of the world.

Internet had not penetrated so deep into travel industry or into the common man’s life in general. Most of the travel booking needed to be made via a phone call or an in person visit to your local travel agent. And most likely, your local travel agent knew you by your first name if you were a frequent leisure or business traveler. Along with the itinerary you would also get a total bill which you need to pay to this agent or agency which included booking charges. And of course, you were happy to pay it given that it saved you lot of time or in fact you did not even know how to do this without involving a travel agency.

Rise of Online Travel Agencies ( OTAs )

OTA are the online travel agencies, they can book your tickets just like any local travel agencies which you might have called at some point over phone. They show you travel options also let you book air or hotel tickets directly through them. Also they become your point of contact if you need any amendments or changes to your travel itineraries.

Around approximately 16 years ago, dotcom bubble started driving all the businesses to build an online portal. Pretty much everything businesses attempted selling anything from tooth brushes to million dollar luxury items. And of course that’s why we call it a dotcom bubble as lot for these ideas lacked the required technological, business and social fabric.

Online travel agencies also took off around the same time when people started getting access to PCs and few Kbps dial up internet at home or offices. After 2000, PCs started becoming a household necessity for middle or upper middle class societies and internet speed started to double down its every year while becoming cheaper per byte. It started a whole new cultural & social revolution which changed the way people think & do business.

There are probably thousands of OTAs if we count all the travel agencies around every locality. All of them do only one thing — let you find and book your air tickets or hotel stay through their web portal or mobile app. Two of the most successful OTAs now i.e Priceline and Expedia started their journey in pre-dot-com era and of course they were not the only ones. But only few of them could scale global and were able to adopt fast paced travel industry.

The online travel industry has grown at an amazing rate since 1999. America noted that 15.1 million consumers in the United States booked their travel online. Travel & Tourism generated US$7.6 trillion (10% of global GDP) and 277 million jobs (1 in 11 jobs) to the global economy in 2014–9.8% of total world GDP. This growth fueled lot of investment & innovation into the online travel industry and changed rules of this business for good and bad.

We are simply programmed to love more choices

You can notice this law ruling everywhere from how we choose a place for our fashion shopping to places we hang out for food. We just love to have many choices available to us at any given point in time. It won’t be of any surprise if you choose a nearby shopping mall packed with more than a dozen of fashion outlets with hundreds choices or brands.

Perceived freedom often depends on available number choices

This is also true to web travel industry where travelers want to checkout as many option possible before making a final booking. One of the top deciding factor on which travel web portal you visit depends on number of choices it offers whether number of airlines or hotels.

A recent survey showed that traveler on an overage visits 38 sites prior to making a vacation booking. And 40% or more of these sites are OTA websites which are not visited to check a specific hotel or airlines but to list out & review all possible options.

Choosing your Choices — Meta Search Engines

Before you chose your next hotel or travel tickets, you have to choose an OTA first to even get started with your travel searches. Kayak, Trivago and SkyScanner are some of the most popular Meta search engines but there lot more than we can list here. Now you might ask why do we need Meta Searches on OTAs if a single OTA can list all the choices we need ?

It is all about getting best possible deals

Have you ever argued with your girlfriend about travel site to use for your next vacation ? There’s 40–50% probability that both the sites were owned by the same business. You would be surprised to know that does not matter whichever OTA you choose, you are most likely going to choose one from only 2 largest OTAs in the world — Priceline and Expedia.

Hotel or Airlines often run a promotion or exclusive deals with certain OTA which offer you better rates and you don’t want to miss out on those. So now Meta Search Engines became an important part of your travel booking since they let you compare prices from OTAs with single search.

Search dominates the online travel booking industry and often is a starting point of the travel planning process