Posted by Ric Garrido

Online travel agencies, companies like Expedia and Priceline, increased their market share of hotel bookings in 2013.

OTA bookings increased 13.6% in Q3 2013 compared to Q3 2012.

Hotel brand website bookings increased 5.3% in Q3 2013.

I understand the value of an OTA when booking a non-brand hotel, but I do not understand why people pay more to book a brand hotel through an OTA. Brand websites like Marriott.com, Hyatt.com and StarwoodHotels.com offer the lowest rates or else you can invoke a Best Rate Guarantee claim and reduce the rate significantly from the OTA price when it is lower.

The OTA channel had the highest ADR growth at 8.0% for Q3 2013. Research data shows OTA sites make most of their profit from hotel bookings. The lowest ADR increase among booking channels at 2.5% was through hotel brand websites. Rate increases were higher for hotels booked through GDS (travel agents) at 2.5% and phone reservations at 3.8%. This seems to indicate the low ADR increase at hotel brand websites is due to lower rates at hotel brand websites even compared to phone reservations made through hotel brand channels.

Perhaps it is due to travelers booking their airfare through OTA sites that the OTA is also used for hotel bookings. I use OTAs to quickly compare rates across different hotel brands and look for the best deals in a city I plan to stay. But when it comes to booking my hotel, it seems to me a no brainer to book the hotel through the hotel brand website, receive loyalty points and benefits and save money compared to an OTA booking.

Unless you are booking an independent hotel or day of arrival at a brand hotel, the Best Rate Guarantee (BRG) claim can be your best route to hotel rate savings in cases where the rate on the OTA is actually lower. Most hotel brand BRG policies do not allow day of arrival claims.

Almost always the rate will be the same or there will be a lower rate available with the hotel brand website if booking a hotel in a hotel name brand like Holiday Inn, Sheraton, Marriott or Hilton. OTA sites use the Standard rate whereas hotel brand sites usually offer AAA, senior and corporate room rate discounts that often offer a lower rate than the OTA rate.

Data Source: TravelClick December 3, 2013.

13 Responses

  1. perhaps it’s those pesky Room Key pop-unders ;)

    Comment by airshadow on December 5th, 2013 at 9:18 am
  2. Yeah, I hate that RoomKey pop-up.

    RoomKey kept coming up this morning when I was trying to check the Hilton brand hotels for the Sage Hospitality discount rates instead of taking me to the Hilton website.

  3. Unless one needs elite qualification nights, Orbitz’s 5% rebate is pretty attractive isn’t it?

  4. The average person doesn’t stay in hotels enough to get hotel status or have much use for hotel rewards points since they are unlikely to stay enough to get enough points for a redemption. It is just easier to use an OTA if it is the same price as the hotel’s website.

    Another example is a moderate traveler who might stay 10 nights per year in a hotel, but not at a specific brand. In this case using the hotels.com rewards program with a free night after 10 nights makes more sense to them.

  5. I believe that it is purely ignorance on the past of the traveler. The vast majority of the people I ever talk to about travel, and I mean almost everyone, don’t have even the slightest idea of how to derive the most benefit from travel benefit. Points, BRG, getting status through means other than stays, etc.
    The OTAs make a compelling sale telling the naive consumer that they have the lowest rates.

    Comment by Ben Senise on December 5th, 2013 at 10:54 am
  6. If I didn’t have status, I’d probably reserve with OTA, assuming both sites have the same cancellation rules. Chase Ultimate Rewards portal usually offers 3-5% more for using travelocity I think.

  7. Do any OTA’s offer AAA or AARP rates?

    Comment by brandon evans on December 5th, 2013 at 1:44 pm
  8. I don’t think it is ignorance at all – if you are an infrequent traveler or have just giving up on “loyalty” programs – the OTA are a good way to go:
    hotels.com will give you a 10% discount via their welcome rewards program, which is more than ANY hotel program directly! In addition, you can get 7% via a cashback portal (more than cashbacks for most hotel websites directly), resulting in a total 17% discount of the rate you are getting through the hotel website. You get all of that without the hassle of the BRG claims.
    You’d have to achieve high-level status and extract a lot of benefits form it to make up for a 17% discount!
    Given the recent devaluations, most travelers should really re-assess their plans for 2014 – for many it does not make much sense anymore to be loyal to any program. Just collect a few credit cards for the perks and then book wherever you get the best deal!

  9. I totally agree with FYD.

    Some cashback sites even pay 10% on hotels.com bookings. Thus for every booking 10% arrive in my bank account and an additional 10% goes towards a free future hotel stay.

    Further bonus: I can prepay many foreign hotels through hotels.com in the currency of my choice, thus avoiding the 1.5% foreign transaction fee of my credit cards.

    I used to have top tier status in a couple of programs but changed my strategy a year ago. I still check promotions and accumulate points occasionally but hotels.com has become my default booking option.

  10. If I was only getting 20% return for loyalty programs, then I probably would not bother with them either.

    I place my rate of return around 50 to 75% between loyalty benefits, upgrades and future room discounts.

    Typically I get $500 to $750 in additional room value and future rate savings for every $1,000 spent with the major hotel loyalty programs.

    Much of the hotel value I find is due to the flexibility I have to travel where I find deals rather than frequently having to be in a particular place at a specific time for meetings or events.

  11. I’ve been puzzled by the growth of the OTA’s marketshare as well. I’m pretty sure that both biz travelers and very frequent leisure travelers rarely use them. The growth is obviously in the “infrequent traveler” market.

    There is little doubt that, in at least 80% of situations, you can get a better deal going direct to the hotel than using an OTA. You’ll get a lower rate, a better room, more perks, etc. It’s not hard to contact a hotel, even overseas via email (there’s even google translate in the unlikely event you’ll have a language issue). In 98% of my bookings, I can use google to track down an email for a hotel and write them an email in less than 5 minutes, after browsing their website, which usually gives me a better idea of the hotel and their potential rates. This isn’t rocket science. But it seems to be more than most travelers are willing to do, even if they could save some serious dinero.

  12. I can understand why you wouldn’t book through Expedia, hotels.com etc, but Priceline is another story. I have bid on & booked several of their higher end properties. Although you don’ t know the specific hotel you get until your bid is accepted, I have booked some spectacular hotels with them at incredible prices……..Hilton’s, Marriott’s, etc. I recently returned from Marco Island, FL where I had booked a high end , beachfront, name brand hotel for $98.00 a night. I belong to the hotels rewards program, so they upgraded my room when I arrived and showed them my Elite card. I don’t think you can put Priceline in the same category as the other OTA’s.

  13. JVM —

    I wasn’t thinking of Priceline’s opaque booking system, but now that you mention it, that’s a DECLINING portion of their business. Customers don’t really “get” name your own price; they prefer traditional booking methods. Odd that the meteoric rise in priceline’s stock has been accompanied by a decline in interest of their signature product.

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