Biggest Online Travel Agencies — Why they will always run the online travel industry, unless we use Blockchain Technology
From 340 million in 2011 to 567 million USD dollars in 2017, the online gross travel booking revenue worldwide keep growing. In such a big market, why do we always see the same booking agencies? Where are the competitors? Top Ten Reviews launch the best online travel agencies for 2018, in the top 3: Travelocity, Expedia and Orbitz. All three brands belong to Expedia Group.
The two biggest online travel agencies are Expedia and Priceline Group; you may have heard of their brands… Trivago, Travelocity, Booking.com, Hotel.com, Orbitz, just to name a few. Only those two brands control the 95% of the online travel market. What’s the problem about that?
The Online Travel Industry is an Oligopoly
An Oligopoly describe a market which is dominated by a small number of firms, in this case… two. Two characteristics of oligopoly are: (1) They set prices and (2) stablish barriers to enter the market. A big commission from hotel chains goes to Online Travel Agencies, the higher the commission, the better ranking your hotel position will have in their booking sites. In other words, the biggest percentage you spend in the online travel agencies, the more visible you will become for users. If this is a big problem for big chains like Marriot o Hilton Hotels, how does this affect small businesses.
“Hotels are overly dependent on OTAs. With each passing year, hotels pass more and more money to Expedia, Booking.com, Priceline and the others.” — Forbes
Hilton Stop Clicking Around TV Campaign
This barrier stablished by the Online Travel Agencies have became such a problem that even big hotel chains launched TV campaigns to endorse people to book though their website. One example is Hilton with their TV Ad “Stop Clicking Around”.
In this Ad, Hilton wants to communicate: Why you should book though other booking platforms, if is cheaper to book in our website? But the truth is, Online Travel Agencies already won the booking market, mainly because of three reasons.
The Power Behind the Online Travel Industries
The following graphic is from the last 3 months (November 2017 — January 2018) but if you compare it with any other years range, is the same, at the top direct search and organic search, followed by links referral. So what does this tell us?
Brand Awareness (Direct Search): Despite big hotel chains, small hotels don’t have brand awareness. If we are traveling and looking for somewhere to stay, its difficult that we remember the name of the hotel we want to stay, but we remember sites like Booking, Expedia and Bitz, which solve the main problem: Find a place to stay that adapts to our needs.
SEO Strategy (Organic Search): If you type “Book a hotel in …” there is a bigger chance that websites like Booking, Trivago and Hotels.com appear. Domain names like “Booking.com” and “Hotels.com” help a lot to the SEO strategy, without counting the huge amount of money these brands invest to get top positions in the different search engines.
The Real Problem About Online Travel Agencies
They determine the price. If the demand increase, the higher fees they will charge for promotion. Every time that happens, companies need to charge more to their users. So, is there any alternative?
Luckily, Blockchain has provide a solution, a decentralized system where no middle man is required. With technology like Blockchain, allows agencies like TravelBlock to give the power back to the people, offering lower prices and transparent transactions. So why not join the movement?
