Online Travel Agents Offer Low Prices, but at What Cost?
Here’s the deal – we’re all looking for a deal. And why wouldn’t we?
We exchange our valuable time to make money. Of course we don’t want to hand over any more of that hard-earned cash than we have to!
Deal hunting is also being trained into us as consumers these days. We are increasingly seeing cost-focused businesses at the forefront of every industry.
And travel marketing makes it so enticing to grab a great deal. Those splashy travel packages that get blasted to us on our screens make luxury look so accessible. And with airfares that cheap? Literally sign me up now.
Look. I’m here for all of this.
There is nothing wrong with honoring your time (read: LIFE) spent working by respecting your finances.
But is the lowest cost always the option that respects your finances the most?
The best way to respect your finances is by spending money in alignment with your priorities.
While there is nothing wrong with prioritizing cost, have you ever asked yourself why it’s your priority?
If cost-based marketing has kept you from looking past a price tag and examining your values, perhaps now is a great time to take another look!
I’m going to lay out some pretty compelling reasons why you may want to consider booking direct with hotels rather than through online travel agents (aka cheap booking sites). You may find that cost doesn’t even have to be a compromise!
But before I do, let’s take a closer look at why we use OTAs (online travel agents). A complete picture of the booking landscape is a great starting point for making intentional booking decisions.
Why book with OTAs?
While I’m not convinced that OTAs are adding value as often as they are being used, they have definitely earned their place in the travel world.
Let’s take a look at why different parties use OTAs:
Travel agencies almost have to book through third parties. They streamline workflow, allow prepayment in the customer’s currency, and offer instantaneous availability, prices, and confirmations.
Agents can only offer the superb service they promise to deliver if they are working with the most cutting edge tools – tools many hotels don’t provide.
However, most travel agents I know happily book direct when the hotel makes it straightforward and beneficial to do so.
Some hotels prefer third parties because they manage their online payments.
Booking sites also provide marketing, which offers hotels a much larger customer base than they would have on their own.
And, at the end of the day, online booking engines are generating bookings for the hotel. Even though OTAs take a pretty penny as a commission, hotels are in the business of bookings. Besides, each hotel stay offers a chance for a repeat booker – maybe even a future direct booker!
Online booking engines provide travelers with a helpful platform to research and compare hotel prices and reviews.
Their secure online payment systems also come in handy. This is especially true when you’re booking a small property in another country that may not have an electronic payment system set up.
I have had hotels ask me to send them a picture of my credit card to process payment. Booking through an online retailer is a great way around that sort of hassle.
They can also make it easy to plan a trip by recommending products their (annoyingly accurate) algorithm believes you’ll like. It can help with organization to have multiple trip elements booked in the same place.
OTAs definitely keep the booking process easy for consumers. And as long as everything goes to plan while you travel, that may be enough for them to earn their keep.
Why book direct?
Yes, there are a lot of reasons that OTAs have gained such a significant piece of the travel booking landscape. That’s why they are usually the first place would-be travelers turn to when planning a trip.
So why book direct?
Let’s take a deeper look:
1) Most Hotels Prefer Direct Bookings
While not true of all hotels, most hotels prefer it when you book direct. Their direct booking campaigns alone indicate how important it is for hotels that customers book direct. They put this effort into lobbying for direct bookings because online booking sites take a big chunk out of their profits, sometimes up to 30%!
But hotels are beholden to whatever percentage the third parties want to charge. It’s industry suicide to not have a presence on these sites. In order to have visibility, they have to take the price cut. Talk about being stuck between a rock and an OTA.
This is especially challenging for small hotels. They have much less negotiating power with the big business of online travel booking engines, and much less room in their operating budget to hand over their profits to these giants.
If you’re an explorer who embodies conscious travel ideals, then you likely prefer staying in small and local hotels.
Who do you want to support with your travel budget?
If you’re like me, you make sure as much of it as possible stays with the host of your travel experience rather than a booking engine. Especially if you’re staying at a small hotel!
Ever heard that three’s a crowd? Remember that when considering inviting a third party on your vacation with you. Make sure it’s the crowd you want.
My husband broke his leg the day before I was set to travel with my family to The Wizarding World of Harry Potter for my bachelorette party (great timing, love!).
I had to quickly decide if my family should party without me or if we would try to reschedule the non-refundable booking we’d made.
Fortunately, I had booked direct with the hotel. They were more than happy to change our travel dates under the circumstances.
It was a simple phone call, no offshore call center, and very little hold music required. Having direct contact with the hotel made a very challenging day much, much easier.
This is something I have seen time and time again through my travels and my work as a travel agent. Hotel customer service, especially with smaller properties, can be so much easier to deal with than a third-party call center.
And when you book through a third party, you do have to go through its call center. If you do call the hotel and ask for flexibility, they will normally refer you back to the customer service department of the site you booked through.
You’ll also find that in addition to having to wait on hold with the OTA’s call center, the hotel is less likely to be flexible with the third party than they would’ve been with you if you’d booked direct.
When you need flexibility from a hotel, that third party becomes a third wheel and can really put a wrench in the works.
Hotels pride themselves on hospitality! Booking direct through hotels gives them the best opportunity to up their hospitality game during your stay.
For our wedding and honeymoon, I booked every one of our 5 hotels direct.
Booking direct gave me the chance to tell them that we were traveling for a special occasion. All of the hotels – boutique and chains – did something to make our trip even more special.
Nothing warms a honeymooner’s heart more than a free upgrade, little welcome notes, flower petals, or wine and cheese delivered on arrival. Except for the warm glow of a new marriage, of course.
This is not just the case for honeymooners, though.
I received a free upgrade when I stayed at a charming family-run hotel in Tasmania. Emailing them to introduce myself before booking direct gave us a rapport before I arrived! That rapport and their hospitality continued throughout my entire stay.
Connecting with the husband and wife team during my trip was so memorable that I returned a second time – and was greeted with another free upgrade.
Being showered with free stuff is, of course, the exception rather than the rule. But take a look at the hotel’s website before booking on an external site. I wouldn’t be surprised if you see offers for drink vouchers, free breakfast, or special welcome gifts for guests who book direct!
Even if there’s nothing extra to gain from booking direct, hotels are your local hosts when you travel. They have the ability to make your trips memorable.
Starting a connection with the property before arrival can result in truly rewarding travel experiences, ones that would be harder to come by if your booking came through an outside source.
This one doesn’t require much unpacking.
Once you stay with a hotel, you’re likely to receive a future stay discount. Hotels want you to book direct, and they are willing to incentivize you with discounts to stay with them again.
Can’t wait for a second visit to get a discount?
If price is the main deciding factor for you when you book, email the hotel before booking online and ask them if they’ll match the rate the OTAs are offering.
Many hotels will discount your stay if they know they will lose the booking to a third party. In fact, you may get a better deal for reaching out to book direct!
An exploration of booking ethics will always be incomplete. This is partially because ethics are super subjective, but also because the ripple effects of our bookings are really complicated. But here are a few ethical considerations for you to take on board as you consider booking your next getaway.
OTA Business Practices
With the wide range of online booking sites out there, there is an understandably huge range of business ethics represented.
OTAs have been accused of many questionable business practices.
Some force hotels to agree not to undercut the rates they offer the OTAs.
Booking sites have also been accused of featuring properties that pay a higher commission more prominently on the site.
These booking sites are also based in a range of countries, so the profit from your booking may not end up in the country you live in or are traveling to.
This also means that local jobs and local taxpayers, both at home and in your destination, may not be supported by your booking.
And perhaps the greatest risk with an OTA is that you don’t always know if it’s legit or not.
It’s gut-wrenching to hear about people who book with an OTA that goes bust the next day. Especially when the booking site never ended up booking the hotel!
Not all of these practices are unethical or even that surprising when talking about big business. But are they the types of practices that entice you to support them with your bookings?
Point of Contact
These days, greenwashing has become an unfortunate trend. It can be hard to understand the business practices of a hotel just from looking at a website, especially when using an OTA.
If you travel under a set of guiding principles, such as eco-friendly or anti-human-trafficking, it is important to ask questions before you book!
Directly corresponding with the hotel gives you the opportunity to ask these questions. This is great even if you don’t end up booking, because it starts a conversation that may result in a hotel updating its policies in the future.
Booking direct keeps tourism money in the host community. Keeping tourism money local supports the UN’s sustainable development goals of reducing poverty and ensuring locals have meaningful work.
A direct booking also encourages a conversation and connection between the hotel and the guest. This opens up the opportunity to affect even more of the sustainability goals.
From education and reducing inequality to green business practices and future sustainability partnerships, a positive ripple effect can be initiated when you intentionally book direct.
Cheap Rates, Cheap Ethics
The race for the lowest price can force suppliers to cut costs to remain competitive. The result is often a dip in quality. Far too often, the result is also a dip in ethics.
No one wants to think about maids kept in captivity with no wage, hotels hosting human or drug traffickers for a kickback, underpaid employees stealing from guests, or the illegal filming of guest activities being sold on the black market.
Yes, I did just go really dark on you.
I don’t like to think about the seedy underbelly of the travel industry either. But just because we don’t like to think about it doesn’t mean it’s not happening.
Each purchase we make can have a ripple effect, and the only thing I like less than thinking about the seedy underbelly of travel is accidentally contributing to it – even in an abstract way.
Booking direct with hotels is one of the easiest ways I can think of to feel a little better about my contribution to the travel industry. A feeble starting point, sure, but a starting point none the less.
Let me be clear: OTA’s are not the cause of the dark side of travel.
But the race to the price basement can entice hotel owners into unethical business practices.
Also, the convenience of a mindless booking on an external site creates distance between you and what you are actually buying.
Taking a minute to assess a hotel, ask questions, and support a great business with a direct booking empowers you to stay in touch with what your money is supporting.
I’m not writing this to pass judgment on people who chose not to book direct with hotels.
Everyone has their own values gauge, their own needs, and their own budgets. In fact, there are times that I intentionally book through OTAs!
But I am writing this to introduce the question: are OTAs are adding value as often as you use them?
If you are in the camp of booking through an OTA out of an unexamined habit, take a minute to examine it.
Take a sniff around the ease with which you make purchasing decisions, and if you think there’s room for a choice that aligns more with your values – move in that direction.
Travel is a transformative experience and I honor those who play an active role in making it come alive for me.
I believe hotels are the frontlines of my travel experiences. OTAs are not. At the end of the day, that’s what usually dictates where my money goes.
What’s holding you back from booking direct? Or do you book direct already? Continue the discussion in the comments below!