Despite Fee Cuts OTAs Still Face Defections

As an analyst - I spend a lot of time explaining the travel market place to Financial and Wall Street types.

One of the common perceptions amongst the general public (is that an archaic term yet) is that everyone is an expert in travel to some form of degree. Everyone is opinionated that is for sure.

As experts one question I always ask an external analyst is how they do their own booking. The vast majority always state that they book the majority of their travel particularly airlines on the airline.com website or via the call center. (The latter is for International reservations).

The OTAs are pretty much in the same situation as meta and regular search companies if offering a service that provides context to the search and selection process of a trip. In my own case - and it would seem there are many who do the same thing - I always look in the generic places first (at least 1 OTA and meta search site) but rarely do I book via that OTA. The only time I do is if I find a lower rate (without any corresponding loss of value).

PhocusWright has done a study on conversions. Here is the interesting part of their release:

"The fee cuts have not eliminated the defection of OTA air shoppers to airline Web sites. Despite the removal of most service fees on airline tickets, OTAs still lose over half of their air shoppers to supplier Web site for booking. This signals that there is more to the switching behavior than just the fee element. OTAs lose more bookings to air suppliers than they do car or hotel shoppers."

While much of this is obvious - the very facts speak volumes. Car and Hotel shopping is a dark art and the car.com and hotel.com sites are still not doing as good a job as the airline.com sites. Air Shoppers are commodity buyers.

I think its safe to say that the opaque models don't stay opaque very long. Suppliers know this and are acting accordingly. OTAs who managed to show some value here are losing that advantage.

Bottom line - chaps the search process is changing and the OTAs better wise up and do a better job of showing value or they will continue to lose share of conversions.

Cheers