Planet of the OTAs — The Curious World of Online Travel

Technology, and more specifically the internet, has been both the great disrupter and the great equaliser for the travel industry. By placing almost any kind of data imaginable at your fingertips, there was suddenly an equal expectation that the physical world should follow suit. The 1990s and the wider adoption of the internet saw a travel industry in bloom, as self-lead discovery of exotic new locales online provided both new destinations to visit and equal opportunity for even the smallest hotel to now have a global presence.

But just as the internet allowed people to digitally navigate almost any destination their hearts desired, they also expected to be able to book these destinations online just as conveniently as they found them.

Unfortunately, in many cases, this was not an option — seen by many hoteliers to be unnecessary, excessive or too expensive. But just as necessity is the mother of all invention, this unrequited desire for the convenience of booking online gave birth to an entirely new industry — one that fulfilled this need.

The demand for online functionality had turned the industry on its head, as new brands emerged to take advantage of the newfound opportunities to act as both merchant and marketer of other’s products and services on the web, leaving many established brands behind — struggling to keep up with the lightning speed of change on the internet.

1996: Birth of the OTA

Perhaps the most significant year for the digitisation of the travel industry was 1996 — the year that saw the birth of many of the online travel juggernauts that are household names today.

Already at the forefront of the online revolution, Microsoft took advantage of the early customer momentum and created an online travel division that they dubbed ‘Expedia’. Meanwhile in Europe, a small start-up called “Bookings.nl”, was founded in Amsterdam. Later that same year, electronic airline reservation system Sabre, launched Travelocity, its own site to help the DIY traveller.

Digitising Word of Mouth

Although forums where travellers could discuss their hotel experiences already existed, there was no centralised platform where travellers could go to search for in-depth recommendations and reviews of hotels from anywhere in the world. No-one would’ve guessed that a small business located above a pizza joint in Massachusetts would transform into the most popular travel website in the world, but Tripadvisor emerged in 2000, answering the need for sorting and searching aggregated reviews and information about guests’ hotel experiences.

Airlines Lead The Way To OTA Market Dominance

Online travel agencies quickly became the solution for hotels and airlines who wanted to offload excessive amounts of unsold inventory. Airlines caught on quickly to customers desire to book hotels and flights on the internet and in 2001, five of the six major US airlines used their combined forces to create their own definitive OTA competitor, an effort to retain control of the online booking experience, and despite protests of unfair competition, Orbitz came to be.

The Turning Point

Priceline started becoming a dominant player in the booking industry, purchasing “Active Hotels” and then Booking.nl in 2005, later renamed Booking.com. Booking.nl was a highly popular site in the European travel market, and Europe was an unanticipated cash cow for Priceline. Europeans spent far more time and money on weekend vacations than Americans, making this a massive opportunity to drive repeat business at a much larger scale than in the United States. Those purchases renewed Priceline’s focus on hotel bookings by boosting hotel agreements from 10,000 to over 100,000, ensuring Booking.com became the most widely known online travel brand on the internet.

The Game Changer

In 2006 AirBedAndBreakfast was founded, and shortly afterward changed their name to Airbnb. In a small period of time, Airbnb quickly rose to the top and became the darling of the online travel brands. Airbnb simultaneously offered a cheaper solution for young digital natives looking to travel, whilst also offering property owners a marketplace where they could rent their properties for short stays.

This ‘authentic travel’ market dominance solidified in 2014 when Airbnb went through a rebranding phase, officially changing their mission statement to ‘belong anywhere’. The company’s co-founder Brian Chesky later explained in a detailed blog post the concept behind the mission statement; “A long time ago cities used to be villages. But as mass production and industrialization came along, that personal feeling was replaced by mass-produced and impersonal travel experiences and along the way, people stopped trusting each other.” This focus on the guests and their experience strongly resonated with Airbnb’s audience who already valued the service’s diverse and niche accommodation options. Airbnb’s rebranding and subsequent success highlighted a golden opportunity for hoteliers to personalise their own offerings and focus on customer-centric travel.

The Next Great Need

The demand for immediacy and online functionality forged an entirely new industry in OTAs. The desire for unbiased information and experienced opinion drove the success of TripAdvisor. The accessibility and affordability of travel propelled the expansion of Airbnb. All these inventions were born of consumer necessity — these businesses profiting from the missed opportunities of the hotel industry.

Customer-centric travel is this next great customer need, and 2017 is the year for hotels to seize this moment; to personalise and offer customers what they truly value from the very first interaction. Because if there’s anything to be learnt from the past 25 years of travel technology, if hotels don’t, someone else will.

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