Online travel agents, is this your time to take control?
For the past decade, online travel agents (ota’s) such as Booking.com and Expedia have continued to tighten their grip on the tourism market, but there are indications that the power may be starting to move back into the operators hands.
The reason for this change is the arrival of some significantly lower cost rivals, particularly Air B+B who charge hugely reduced commission levels over their more established rivals, creating a price war in the sector.
At a recent meeting, an established operator with a very deep understanding of the sector and online travel agents was explaining that they had withdrawn from ota activity for a period of time then had re-engaged on their terms, securing a much reduced deal over their historic agreement.
There are also examples of some operators playing rivals off against each other for preferential rates, and even some online travel agent’s approaching some operators with discounted deals to secure their properties.
Challenging pricing in this way is perhaps more difficult for smaller operators, however as more larger operators challenge their commission structures this will no doubt eventually fire down rates through the sector, particularly if more low commission offerings entering the market.
Perhaps the way for smaller operators to challenge commission structures would be to work together as part of a trade association and see if preferential rates can be secured as a group.
If you have any questions or would like to discuss online travel agents with us in more detail, please contact Colin Johnson or call on 01539 729727 to be put in contact with a member of our Leisure and Tourism team.