OTA Models

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Online Travel Agent Models

Published in: Business, Travel

OTA Models

  1. 1. Online Travel Agent(OTA) Modelsby Pranalee Rokde
  2. 2. OTA● OTA stands for Online Travel agent● Acts as 24/7 appointed salesman for hotel● One stop solution for all hotel bookings forend customer● Comparison engine for end customer
  3. 3. OTA Models● Merchant Model● Agency Model
  4. 4. Merchant Model● Contract between OTA and hotels to sellbase number of rooms● Usual margin for OTA is 20-30% due to bulkpurchase● Depending upon contract OTA may not beobliged to sell all rooms● e.g. Expedia, Agoda
  5. 5. Agency Model● Commission based model - per room sold● Hotel owner decide final selling price tocustomer● e.g. Booking.com
  6. 6. Advantages of Merchant Model● Good bargain power due to bulk purchaseleading to higher profit margin● Can select rooms usually preferred bycustomer● OTA can package hotel with other offerssuch as flight/car
  7. 7. Disadvantages of Merchant Model● May not be preferred by hotel owner due tohuge profit margins of OTA● May need bulk investment if contract isprepay payment to hotel● Rapid expansion with multiple hotelsbecomes difficult due to heavy investmentand contract involved
  8. 8. Advantages of Agency Model● No upfront huge capital investment isrequired● Preferred by hotel owners due to morecontrol over final selling price● As its easy to collaborate with many hotels,end customer gets wider choices
  9. 9. Disadvantages of Agency Model● Less bargaining power for OTA● Less profit margins for OTA● Can not be packaged with other offers
  10. 10. Thank you
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