Why To Avoid Booking Travel with Online Travel Agencies (OTA)

Whether you’re new to the travel space or have been globetrotting for a long time, the following question may have crossed your mind at one point or another: why are there so many different ways to book the same flights and hotels?

Vendors like airlines or hotel chains have their own dedicated websites, then there are aggregators like Google Flights or Skyscanner, websites such as Expedia or Booking.com, and that’s before considering old-school travel agents that can be found at the mall or on Facebook.

So, why are there so many booking options? Why does every website seem to be some kind of Online Travel Agent? Are these platforms a good deal, or is it better to steer clear?

What is an Online Travel Agency (OTA) and Why Does The Travel Industry Use Them?

An Online Travel Agency (OTA) is a website or app that allows customers to view lots of different travel products, be they flights, hotels, or tour experiences, and book them.

The OTA always operates both as the vendor of the travel product and as the payment product. This is important because while you might stay at a Marriott hotel or fly on United Airlines, the ticket itself is purchased from an OTA such as Booking.com, and thus, it is their responsibility. This will become relevant later when we discuss the downside of this arrangement.

Also of interest is that many OTAs you’ll find online will look like different websites, or brand themselves with contrasting livery. However, many are owned by the same oligopolistic parent companies; for example, Hotels.com and Expedia are both part of the Expedia Group behemoth.

The primary reason that hotels tolerate, or even encourage, the practice of using OTAs is an administrative feature that has little to do with the platforms themselves: visibility.

Just Googling hotels in my homebase of Edmonton shows online travel agencies exclusively at the top of the search results:

This is by design. The OTA platforms are big business, and pay a lot of money to tech giants like Google to ensure that their products are being shown to customers and showing up in their search results via sponsored placements.

These same online travel agencies then make money by being paid commissions by the travel vendors for whom they make bookings (for example, if an OTA books a room at a Hilton, then Hilton corporate will pay them a commission).

Another sneaky thing most OTAs will do is charge you upfront for stays at hotels, as opposed to when you book directly where they may only take a small deposit or just a credit card to hold the booking. This lets the online travel agency pocket the money while you wait, though the free refunds usually offered by most OTAs offer great value if you have the stomach to try mechanisms like the refundable hotel trick.

Why Do Consumers Choose Online Travel Agencies?

One of the first and main reasons that travelers use OTAs is because of their visibility and ease of use. By paying for sponsored Google placements or various ad services to aggressively push their brand as a booking solution, it becomes easier to get eyeballs onto the OTA. More eyeballs on a brand of course means it is easier for customers to then take the plunge of booking via their app or website.

Once on the app or website, the next reason becomes clear: a lot of work is put into making the OTA experience as easy and simple as possible. Prices are almost always displayed in the purchaser’s currency, and because payment is all made on the OTA, the booking flow is much easier.

For lovers of experiences like cruises or all-inclusive resorts, it can be simple to compare and contrast the prices of such experiences before booking them since they tend to be packaged with the required flights. This also means consumers don’t need to worry about booking individual flights, another convenience.

Then there’s the question of price: many online travel agencies will tease a lower price when being searched via Google, though unfortunately, this doesn’t always reflect reality.

The last reason many consumers will use OTAs is because they’re redirected there by travel search aggregators. These aggregators may contrast hotel rates, though it tends to be more common for people booking flights.

Platforms such as Skyscanner, which act as hubs of potential rates, will give would-be travelers a chance to compare the price of tickets being sold by multiple vendors and pick the one that they feel fits their needs. Generally speaking, those vendors are OTAs.

While these flights booked by OTAs will run into some of the problems we’ll see later, it does offer an easier platform for customers to use. 

For example, it is in many countries a little difficult to book local flights at an economical rate without speaking the local language or knowing exactly how to navigate the minutiae of local bureaucracy. Therefore, the OTAs selling flights they bought in bundles at competitive rates to travelers offer a useful service.

The Main Reasons to Not Book Travel With Online Travel Agencies

While using online travel agencies is an easy one-stop-shop solution that many consumers prefer, there are a few downsides that can result when booking travel through these platforms.

No (or Limited) Loyalty Benefits or Earning Towards Elite Status

Let’s get the elephant out of the room first: the reason that booking with online travel agencies is a bad idea is that it voids your ability to work towards loyalty program elite status or receive loyalty benefits with the originating chain.

If you book a Holiday Inn on Expedia, there will be no forthcoming IHG Rewards points. If you’re checking into a St. Regis that your executive assistant inexplicably booked via Tripadvisor, you aren’t going to receive your Marriott Bonvoy Platinum Elite benefits such as a free breakfast or a shot at a complimentary room upgrade.

You can also kiss your Elite Qualifying Nights goodbye. Is the hotel being overbooked? You can’t rely on elite status to save you or get you a fee for being walked; you booked via an OTA and as such are a low-priority plebeian in the eyes of the front desk.

This makes OTAs one of the most convenient ways to book a hotel, but one of the worst ways for you to do so as a consumer.

Are you flying? Congratulations, you can actually get your frequent flier benefits such as elite status and mileage if you input your frequent flier number or tell it to the desk staff. On the flipside, you’re now at the mercy of both the OTA’s IT infrastructure, as well as that of the airline. There’s a good chance you’ll need to follow up manually.

We should note that many OTAs have rolled out their own loyalty programs, some of which, such as Expedia’s OneKey project, can be used across multiple different websites. However, the earn rates here tend to be fixed percentages based on the cash you’ve spent, thus making them somewhat weaker than a comparative hotel or frequent flier programs.

And if those weren’t reason enough, get a load of the next one….

Getting Help From Customer Service is a Chore

When it comes to anything going wrong with your travel plans, if you booked with an online travel agency, then the hotel or airline is going to tell you to buzz off.

You may have bought tickets that are serviced by Air Canada, but if flights get canceled, you need to call your OTA to help sort out the mess. This can be a disaster, especially for families with limited time to dedicate to calling automated helplines during peak travel times such as the busy Christmas season or spring break.

While it’s never fun to call an airline or hotel during a disruption, it’s much better to be a direct customer rather than someone who can be told to call the OTA. A complaint against an airline or hotel chain can be escalated to the parent company’s corporate office; at an OTA, everything is the corporate office and might not have any immediate connection to your travel plans which just got disrupted.

As mentioned, too, about the situation of being walked by an overbooked hotel, the only recourse you’ll have is to complain to your OTA or write a dissatisfied Google/Tripadvisor review. That is not nearly as useful as being granted goodwill Marriott Bonvoy or Aeroplan points, or a gift voucher.

Caveat Emptor (Buyer Beware)

As always we return to the lessons of the ancient Romans: caveat emptor, or buyer beware.

OTAs consistently fail to deliver on marketed promises. Let’s take a look at the assurances of lower prices, which many such OTAs often tease on the Google Flights or Google Hotels algorithm by looking at this unbranded independent hotel in Toronto:

As we can see, the online travel agency Agoda is promising only $135 for the same room versus the $158 being proffered by other merchants shown on Google.

However, when we actually enter the Agoda booking workflow, the price reverts to the same $158 as everyone else.

This is obviously not the price or service that was offered to the casual searcher. An interesting point to note was that had it been truly lower, many hotels, especially major chains like Marriott or Hilton, would price match the lowest publicly available rate from an OTA if you want to book directly. Look into the Marriott Best Rate Guarantee or the Hilton Price Match Guarantee for more information on how these programs work.

This is good business sense for both the consumer and the hotel, because you get the security of booking with the property, and they don’t have to pay the OTA any commission. Alas, it can take more work to price match with the chains that offer this benefit, but would be worth it in the end.

Lastly: if something is priced in a way that is “too good to be true,” it probably is. You’ll need to double-check that the “discounted” rates aren’t just prepaid non-refundable rates. There are also reports of some OTAs with bad IT infrastructure or very low prices either not making bookings at all, or attempting to make them at overbooked properties. Be cautious!

Conclusion

We hope that we’ve explained today what OTAs are, why they’re a successful and booming business, and why they aren’t really in your best interest as a consumer.

While OTAs can provide a huge level of convenience for many travelers around the world, they do so at the expense of benefits and customer service. If you see a really great deal you’re seeing nowhere else, then the potential downside may be worth the risk.

For me, I’ll be booking directly. Until next time, I hope you do the same.