Online Travel Agent Models

1. Online Travel Agent
(OTA) Models
by Pranalee Rokde

2. OTA
● OTA stands for Online Travel agent
● Acts as 24/7 appointed salesman for hotel
● One stop solution for all hotel bookings for
end customer
● Comparison engine for end customer

3. OTA Models
● Merchant Model
● Agency Model

4. Merchant Model
● Contract between OTA and hotels to sell
base number of rooms
● Usual margin for OTA is 20-30% due to bulk
purchase
● Depending upon contract OTA may not be
obliged to sell all rooms
● e.g. Expedia, Agoda

5. Agency Model
● Commission based model - per room sold
● Hotel owner decide final selling price to
customer
● e.g. Booking.com

6. Advantages of Merchant Model
● Good bargain power due to bulk purchase
leading to higher profit margin
● Can select rooms usually preferred by
customer
● OTA can package hotel with other offers
such as flight/car

7. Disadvantages of Merchant Model
● May not be preferred by hotel owner due to
huge profit margins of OTA
● May need bulk investment if contract is
prepay payment to hotel
● Rapid expansion with multiple hotels
becomes difficult due to heavy investment
and contract involved

8. Advantages of Agency Model
● No upfront huge capital investment is
required
● Preferred by hotel owners due to more
control over final selling price
● As its easy to collaborate with many hotels,
end customer gets wider choices

9. Disadvantages of Agency Model
● Less bargaining power for OTA
● Less profit margins for OTA
● Can not be packaged with other offers

10. Thank you