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Standing Out as an Online Travel Agent - Differentiation When Technology and Price Are Not Enough

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Online Travel Agencies (OTAs) entered the travel industry a few decades back and have seen tremendous growth over that time. In 2015, they earned $246 billion in global travel sales (↑19% YoY). However, their technological abilities are now being matched by hotels and airlines, and their competitive prices are becoming less of a differentiator due to a reduction in price parity laws, the emergence of sharing economy players like Airbnb, and the increase in price transparency due to metasearch engines. To remain competitive in the coming years, OTAs must look to other differentiators.

In order to determine these differentiators, WNS DecisionPoint(TM) conducted a survey of travel platform users in North America, Western Europe and Asia Pacific to understand how customers use OTAs and what determines their buying behavior. The results uncovered the differentiators OTAs can leverage to form a successful strategy in the future:

- Bundled packages. As airlines and hotels push direct bookings, OTAs’ ability to offer hotels and flights in customized bundles with other offerings, such as car rentals and tour packages, allows them to provide more convenient options.

- Mobile apps. OTAs’ apps, on average score much higher in app quality than hotels and airlines. As more people turn to mobile as their primary method of accessing the internet, OTAs can capture more of the market with safe, easy-to-use and robust apps.

- Loyalty programs. OTAs have some distinct advantages when it comes to the potential of their loyalty programs. By leveraging their wide variety of offerings, they can appeal to the leisure market with more options and a quicker redemption cycle.

To discover the complete roadmap for OTAs to stand out in the coming year, read the full report at
http://www.wnsdecisionpoint.com/our-insights/reports/detail/60/standing-out-as-an-online-travel-agent

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Standing Out as an Online Travel Agent - Differentiation When Technology and Price Are Not Enough

  1. 1. 00 Wnsdecisionpoint.com wnsdecisionpoint.com Standing Out as an Online Travel Agent : Differentiation When Technology and Price Are Not Enough
  2. 2. 11 Wnsdecisionpoint.com Gearing up for emerging challenges  All travel industry stakeholders are focusing their efforts on online channels to cater to the fast growing penetration of e-commerce  Rate parity is being challenged in important hotel markets  Global hotel chains are aggressively pushing for direct channel bookings by providing exclusive discounted rates  Popularity of metasearch engines has resulted in price transparency, making it extremely easy for travelers to compare prices on a single platform, across hotels, airlines, OTAs etc.  The fast growing sharing economy players, led by Airbnb, are creating an added pressure by charging hosts a lot less  Google and TripAdvisor are offering direct bookings by displaying rates and availability via a feed from the hotel’s booking engine system  Technology and price will stop being key differentiators for the OTAs  Important for OTAs to position themselves beyond the role of a mere online agent and be recognized as a value adding entity  Three viable differentiators can be identified to help OTAs carve out a distinguished space in the travel market – Bundled packages – Mobile apps – Loyalty programs  A survey was conducted to understand the customer perception of OTAs and validate our understanding that the above three elements act as potential differentiators in various markets Emerging Challenges Need to Differentiate
  3. 3. 22 Wnsdecisionpoint.com 86% 14% Identifying key focus areas for charting a differentiation strategy 24% 76% 41% 59% 59% 41% First time App Download Driven by Incentive of App-specific Discount Ability to Conveniently Redeem Loyalty Points on App 22% 50% 44% 26% 36% 40% 21% 26% 38% 0% 10% 20% 30% 40% 50% 60% I am not aware of the option Desn't make a significance price difference Packages are too standardized APAC Western Europe NAM 39% 34% 21% 4% 32% 41% 23% 4% 42% 32% 20% 4% 0% 15% 30% 45% Once a month or more Once a quarter Twice or thrice a year Once a year Overall Users of flight & hotel products only Users of non-flight & non-hotel products 28% 50% 56% 0% 10% 20% 30% 40% 50% 60% OTA Hotel AirlineNo Yes NoYes Customer segment: Users of non-flight & non-hotel products Customer segment: Users of flight & hotel products only OTA Bundled Services Mobile Apps Loyalty Programs Use of Bundled Services Frequency of App Use Loyalty Program Penetration Reasons for not Using Bundled Services 79% 21% 72% 28% NoYes Hotel Airline
  4. 4. 33 Wnsdecisionpoint.com  The responses received from more mature markets were in alignment to our assumption of bundled packages, mobile apps and loyalty programs being critical elements in building differentiation strategy going forward  Emerging markets responded a little differently and came across as being more price sensitive Formulating different plans for mature and emerging markets Customizable bundled packages Pushed through mobile apps Further boosted by bonus points in loyalty programs To know more about how customers in various markets responded, download the report
  5. 5. 44 Wnsdecisionpoint.com A credible insights hub for companies looking to transform their strategies and operations by aligning with todays realities and tomorrow’s disruptions. Email: perspectives@wnsdecisionpoint.com Website: wnsdecisionpoint.com @WNSDecisionPt WNS DecisionPoint WNS DecisionPoint

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