Do online travel agencies offer the best deal? And what’s the difference between an online travel agency (a.k.a. OTA) and a host agency for independent travel agents? We have all the intel you need to make the right decision.
Already know the difference between OTAs and real, human travel advisors? Connect with Fora to book and plan your trip with expert advice, VIP travel perks and more (i.e., all the things you don’t get when you book with an OTA).
First, what is an online travel agency (a.k.a. OTA)?
Online travel agencies are “travel agencies” in name only. More accurately, they’re automated marketplaces that allow travelers to book accommodations, flights and car rentals from a single user interface.
Expedia, Booking.com and Travelocity are among the most well-known examples, but there are dozens of choices that offer similar experiences.
Which online travel agency is the most popular? What’s the biggest OTA?
Booking Holdings, which owns Booking.com, Priceline.com and a few other recognizable names, is the largest online travel agency. But Expedia Group Inc., which owns Expedia, Travelocity, Vrbo and, again, other recognizable OTAs, isn’t far behind.
It might be surprising to learn that these two companies own virtually all the most popular OTAs in the United States. But the more important point is that because of a lack of real competition, these OTAs have a lot of leeway in the prices they charge.
Worse, most hotels and suppliers don’t have much of a choice but to allow OTAs to charge high prices on their behalf because such a high percentage of their bookings go through online platforms. Which is where online host agencies come into play. But we’ll come back to that later.
Are there different types of OTAs?
Technically, there are three different types of online travel agencies. However, within the industry, there’s a conscious effort to create separation between them.
The three models are as follows: merchant agencies like Expedia, advertising platforms like Google and, in the strictest, most literal definition of an online travel agency, most modern host agencies.
Merchant-model online travel agencies are exactly what we’ve been talking about thus far. This is the most common type of OTA, and further down, we explain why they’re not your best choice for planning and booking trips.
Of the three choices, hotels generally prefer to get as few bookings from merchant OTAs as possible because hotels don't see as much of the booking value acquired through such sites, and are often delivered less reliable clients. This type of OTA has played a major role in soaring hotel prices since the early 2000s, especially domestically, because hotels have largely been forced to raise rates to protect their profits.
Advertising-model OTAs aren’t agencies so much as they are ad platforms. The most prominent example? Google. Hotels basically pay to advertise their rooms on search engines and similar websites using a cost-per-click model.
For hotels, advertising-model OTAs can offer a slightly better deal than merchant OTAs. But they’re still not most hotels’ favorite choice. Moreover, these OTAs can be frustrating for consumers, as they often display inaccurate prices for hotels and other suppliers.
Contemporary host agencies
Contemporary host agencies are considered online travel agencies only in the sense that their services are available via the internet.
Host agencies such as Fora provide a variety of tools, exposure and other benefits for independent travel advisors, who remain in charge of their own business. The best agencies also provide extensive travel agent training, community resources and more.
In the host-agency model, clients work directly with independent travel advisors — real people — who can not only make reservations anywhere, but also plan itineraries, which is something merchant online travel agencies can’t do. Additionally, travel advisors can answer nuanced questions, set up special accommodations and do much more that an automated system can’t even begin to address.
What do we mean when we refer to online travel agencies?
We’re talking about the merchant model (i.e., Priceline.com, Airbnb, etc.). Advertising models aren’t as popular, and host agencies are, again, only semantically considered online travel agencies.
How do online travel agencies work?
We’ve covered the basics, but here’s how online travel agencies work — and why you may not be getting the best deal if you book through one.
How exactly do OTAs make money?
There are two common ways OTAs make money: first, they operate similarly to a traditional travel agency by earning commission from hotels and other suppliers — car rental agencies, tour operators and so on. Additionally, some OTAs will purchase blocks of hotel-room bookings at a discount, only to turn around and sell them for a profit.
(How do travel agent commissions work? See our guide.)
The top online travel agencies charge hotels & other suppliers exorbitant commission rates
Unlike traditional travel agencies, which typically earn between five and 10 percent commission from a partner, the OTAs typically demand much higher rates, usually around 30%. Many hotels have grown to rely on these bookings, so they have no choice but to raise their rates and comply.
Unfortunately, this has had a ripple effect throughout the industry. However — and this is a big however — contemporary remote travel agents who work with a host agency (like us) are able to one-up online travel agencies by offering awesome upgrades, perks and other benefits to dramatically increase the overall value (we’ll come back to this later) at no extra cost.
Want to know what types of perks Fora Advisors can unlock for you? Book and plan your next trip with Fora.
Why do travelers use online travel agencies?
The simple answer: most travelers aren’t aware of the alternatives.
Traditional travel agencies were decimated by OTAs in the 1990s and early 2000s. Plus, a lot of travelers today either assume that travel agents are a thing of the past (they’re not) or only plan and book bespoke vacations for elite clients (anyone can use a travel advisor).
Are there any benefits of using an online travel agency?
There’s no arguing that OTAs aren’t fast. And occasionally, you may find that online travel agencies offer a good, though rarely the best, deal.
But when you take a look at all the drawbacks below, you may question whether it still makes sense to book through an OTA.
Client-focused drawbacks of using online travel agencies
Curious to know why online travel agencies aren’t your best choice for booking? Read on.
Already convinced? Connect with Fora to plan and book your next trip.
1. You’ll rarely receive the best value (and sometimes you’ll pay more for less)
Online travel agencies may play a role in dictating hotel rates, but they can’t offer the enticing perks you get when you book through a travel advisor instead. In other words, you may be charged the same rate regardless of how you obtain a reservation, but you’ll get a lot more for your money if you book through a travel advisor.
What kind of perks are offered? It depends on the hotel and host agency, but property credits (usually between $50 and $100 in value), complimentary meals, extended check-in/out times and special amenities are just a few of the awesome extras Fora Advisors can unlock.
Fora Advisors may occasionally be able to score better rates, too, particularly at independent hotels.
2. You won’t get a personalized experience
Ultimately, online travel agencies only care about putting heads in beds. That’s their bottom line, and it’s a deeply impersonal process. A personalized stay is off the table.
In contrast, you’ll exclusively work with an actual human if you book through a travel advisor. Better yet, travel advisors can work with a hotel to VIP your stay (even if perks aren’t offered). This is especially beneficial if you require some sort of special accommodation. OTAs can’t do this — and even if by some miracle you manage to put in a request, OTAs don't make sure the hotel follows through.
3. You can’t always redeem rewards perks
This varies by the online travel agency, but oftentimes, you can’t book special rates or redeem rewards when you book with an OTA. Some won’t even allow you to earn points toward loyalty programs.
4. It can be harder to change a booking
Seriously: good luck.
If you need to change a booking, you generally have to jump through all sorts of hoops and hope that the supplier actually hears about the changes — or you have to outright cancel the booking and hope that you can rebook. At best, it’s a hassle. At worst, it can be a nightmare that causes you to lose money that otherwise could have been spent during your trip.
Want to avoid the pitfalls of booking through an OTA? Get personalized service, VIP travel perks and more when you plan and book your trip with Fora.
5. And worse, your booking can be changed or canceled with little heads up
Imagine living out your Spain bucket list only to find out one of your bookings was canceled, and no real effort was made to warn you. Online travel agencies are automated systems — they can’t, and don’t, always react in a timely manner if a hotel is forced to alter or cancel a booking.
Worse, OTAs have been known to overbook hotels or rental cars, leaving some travelers stranded or unsheltered at the last minute. This isn’t a common occurrence, but why even take the chance?
In either scenario, a travel advisor would be able to help you immediately.
6. Hotels know they’re getting lower-quality clients, so they’re less likely to roll out the red carpet
First, let us be clear: when we say “lower-quality clients,” we only mean clients who aren’t likely to rebook the same hotel in the future.
Going back to “putting heads in beds,” hotels have no idea whom they’re catering to when a booking is made through an OTA. At reputable hotels, this matters. Great hotels want to take care of their guests because there’s a promise of repeat business, and it’s the right thing to do.
When a travel advisor makes a booking, they can let the hotel know who their client is and the hotel can take steps to make sure their guest — you — is well cared for. At a minimum, the hotel knows that if they do a good job, the advisor is likely to send back more clients.
For the client, this means they’re far more likely to enjoy an awesome experience when they book with a travel advisor because the hotel is incentivized to roll out the red carpet. When they book with an online travel agency, though, the hotel wants to recoup the OTA commission cost, so they typically offer nothing extra.
Recap: if not OTAs, what are the best travel agencies to go through?
Host agencies such as Fora offer a much better deal than online travel agencies.
Fora advisors offer actual guidance & real service
Fora travel advisors are subject-matter experts. They can break down any aspect of your trip to make sure you’re getting the trip you desire. There’s no guesswork involved, which can’t be said when you book through an online travel agency.
Let’s say you’re booking with a Virgin Voyages travel agent from Fora. They’ll be able to tell you the differences between all the cabins, itineraries and so on. Better yet, they can help you decide which options best suit your preferences and budget, offering a truly tailored experience.
You’ll get the best value when you book with a Fora Advisor
We’ve touched on this before, but it’s worth repeating.
Fora Advisors secure the best available rates for clients, and there are extras to take advantage of when you book with them. Our travel advisors can score all sorts of perks for clients who stay at partner properties (nearly 5,000 hotels globally and counting).
For example, say you book a room at Hotel Californian, one of our favorite hotels in Santa Barbara, through an online travel agency for $500 per night (it’s a nice hotel). You’ll still pay that same rate with a Fora Advisor, but when you book with us, you’ll also get complimentary daily breakfast, a $100 hotel credit that can be put toward the onsite spa and, whenever possible, extended check-in/out times — and potentially more. You’ll also get VIP treatment, personalized service and an all-around better stay.
Find out for yourself when you plan and book with Fora.
And even if you don’t stay at a partner hotel, you will still get better service (plus potential upgrades at many hotels around the world) when you book with a Fora Advisor.
Fora travel advisors offer peace of mind and can help if things go awry
One of the absolute best advantages of booking with a Fora Advisor over an online travel agency: we can help if something goes wrong with your booking.
Whether you receive the wrong room, have a reservation canceled or suddenly require some sort of special accommodation, Fora Advisors can work with the hotel to make things right at a moment’s notice. (Our personal relationships with thousands of hotels around the world help make this possible.)
OTAs often don’t even try — or they put you through a bureaucratic process, days or even weeks later, after your trip.
Does it make sense to book corporate travel through OTAs?
It’s not unreasonable to wonder if online travel agencies offer a better deal for corporate clients. But for all the reasons mentioned above, corporate travel agents still offer better value than OTAs. This is doubly true for more nuanced bookings — like corporate group travel — where it’s wise to have an actual person there to make sure that reservations and itineraries are honored by suppliers.
Want the best value for your trip? Book with Fora instead
Overall, online travel agencies simply can’t compete with the value that a Fora Advisor offers. From A+ travel perks to unwavering assistance if something goes wrong, it makes so much more sense to plan and book your trips with Fora.
P.S. Love the idea of travel planning as a career? Become a Fora Advisor
Considering a job in the travel industry? Check out all the reasons to become a Fora Advisor, from uber-flexible schedules to extensive marketing and training resources — not to mention unlimited earnings potential.