Your Attention is Precious and OTAs make you Pay for it
We are living in the modern world where marketing is omnipresent. It can shape itself into countless forms and find its way into all aspects of our daily lives.
Billboards and Facebook ads are merely the most obvious ones. Influencer marketing has kicked off in recent years, and by now you can be sure that almost any individual with a decent following is selling you products without you even noticing.
The space is getting increasingly competitive as we are bombarded with thousands of both open and hidden ads each day. However, the human attention span is limited and can not keep up with the growing marketing budgets of corporations. Getting a small share of our attention is thus inevitably becoming more and more valuable.
Online Travel Agencies (OTAs) are one of the biggest spenders in that regard. They need to allocate huge budgets in order to protect their monopolistic positions. In this article, we focus on Booking.com and Expedia.com as those two are holding the monopolies in hotels and flights respectively. Together they account for 80% of the total industry revenue.
In 2015, Booking.com spent a whopping $3,36 Billion for marketing. Expedia was on par with them at $3,4 Billion.
Since both of these companies are market leaders, their core strategy is to protect their market share. They do this by positioning themselves as the only available option. If people are convinced that there are no alternatives, they will keep returning unaware that they are paying a hefty commission.
The Vicious Cycle
Protecting their market share would not be this expensive if they indeed had the best prices available. With hefty commissions reaching 20% and beyond, marketing becomes an inevitable part of generating revenue.
The problem with this tactic is that the more they rely on marketing rather than the product, the more they need to raise the commissions to finance their campaigns. Asking for even higher commissions creates an even bigger discrepancy between the price of their offerings and their actual value.
Combating that increasing gradient requires even bigger marketing budgets and therefore higher commissions, which restarts the cycle.
This phenomenon has resulted in a race of increasing commissions among leading booking sites which is reflected by the growth in their marketing budgets.
2015 vs. 2017
Booking.com has raised their budgets from the $3,36 Billion (2015) stated above to $5,09 Billion in 2017. An increase of 51%.
During the same period, Expedia has raised their marketing budget from $3,4 Billion (2015) to $5,3 Billion (2017). An increase of 56%.
The fight for your attention is heating up. And eventually, you are paying for the fight in the form of commissions.
On the other hand, we at LockTrip do not fight for attention over and over again. Once a customer has tried out our service, that customer will be won forever. Simply because being able to save 20% on your travel is a huge added value.
Therefore we will be taking advantage of the increasing price gradient that conventional booking sites are creating. Our strategy aims to stimulate that potential, by turning it into a low cost viral marketing effect.
LockTrip is the first marketplace with 0% commission where you can save on average 20% on your hotel and rental bookings compared to anywhere else. Read how to buy LOC tokens here!