Exploring the rise of mega online travel retailers

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Online travel shoppers are often oblivious to which site they use to make a purchase, whether it is a metasearch or an OTA site. This blurred line has led to the consolidation of business models for Online Travel Agencies (OTA) and metasearch sites.

Until recently, they lived separate but complementary lives, simultaneously working together while also competing for the same customers. But, as business models diverge and business strategies evolve, some OTAs are exploring new advertising models and even buying their own marketing channels.

While metasearch companies move on to assisted booking (metabooking), OTAs have seen a great commercial opportunity in traffic monetization with online advertising and have made a move from being online referral operators to becoming super online advertising businesses.

There is a strong commercial imperative for advertising. The average traveler searches nearly 50 times online, makes 38 site visits, reads a dozen reviews, researches for 15 weeks, and does not have a particular destination in mind when he or she starts looking. This gives online travel players an opportunity to facilitate the process by taking advertising from competitors. If this sounds counterproductive, think again. Users do not see it as advertising but as a core functionality of the site which inspires deeper engagement.

This convergence of the two models and the greater focus on advertising is giving rise to mega online travel retailers, which have a number of advantages. Advanced search technology with merchandising capabilities gives them the ability to experiment with new merchandising strategies. Through advertisements and referrals to competitors, they can monetize the users who would otherwise fall out of the sales funnel and go to an airline.com site. The mix of business models also allows users to get the most valuable deal through a trusted brand and also be serviced by that brand, a key advantage on a mobile application. Finally, they benefit from their own traffic acquisition channels and at the same time they can impose higher entry barriers on competition, particularly when addressing new markets.

The technology transformation required to become an online travel retailer includes better revenue management logic, aggregating ad content or delegating ad space to a trusted partner, and integrating content that is not available to sell outside the supplier channel.

Want to learn more about the rise of Mega Online Travel Retailers and the other trends on the horizon? Download our research paper Online Travel 2020: Evolve, Expand or Expire.

 

Originally published in the Amadeus Corporate blog.

 

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