How an online travel agency (OTA) really works?

As per my experience dealing with multiple travel companies – primarily outbound travel agency who wants to invest in an OTA or B2C website selling channel. They are very existed in investing in the B2C platform and have an ambitious list of features and functionality to be delivered on their website.

But when you ask them how it will work or how will you going to make your B2C platform to fly, they really have very little to say on that, I don’t think it’s their mistake at all as they are moving from traditional travel agency model to technology-driven travel agency model.

So typical an OTA is a technology platform that is available on the web/internet for public access, this is inclined toward the retail travel sales or selling to individual customers than a group.

For an OTA you need a booking engine platform with one or multiple services connected with suppliers/aggregators through XML or through your direct contracts coming from your own inventory management solution after applying the respective markups/commissions which are pre-configured in the OTA back end platform.

Behind the Scene for an OTA:

Inventory:

An Online Travel Agency acquires the inventory from multiple sources – through XML/API Suppliers like GDS’s – Amadeus, Travelport, Sabre, Direct connection with the airlines – Schedule carriers or LCC’s, through flight aggregators like Mystifly, Travelfusion or TBO Air. Hotel content comes from whole sellers API like TBO Holidays, Rezlive, GRN, Stuba, RTS.net, World2Meet, Expedia rapid, Booking.com, Ease My Trip etc. or if you have a direct contract with the hoteliers pushing them into OTA through direct hotel contracting technology solution or through channel managers like Rategain, Derbysoft, SiteMinder etc. for Packages you can sell your own direct contracted inventory or buy it from tour operators like SOTC, ThomasCook, other services like cars, transfers, trains, buses, sightseeing, activities, visa, etc. you can sell on the OTA platform, but if you also check majority of the successful OTA’s focus only on their strength, limited products, straight forward without any confusion – Take a Case Study of https://www.flyin.com/

Markups:

Through OTA technology solution’s travel companies can automate the markups, taxes, service charges to be applied on the booking, they can really drill down for example for flights, define markup for a specific flight from a specific supplier, on a specific PCC, on a specific sector on a given date on a particular class, RBD, etc. they can apply a specific markup to have a cost advantage. OTA’s to retain a customer pricing plays a very important role.

Discounts Management :

Offering discounts to encourage repeat purchase and increase the customer life time value, its one of the most important tool for enhance sales, repeat purchase, customer engagement & loyalty with the given brands. OTA’s offer specific discounts to first time customers, on a specific package on a specific dates, occasion, destination, etc.

Offers Management :

As online travel websites usually have preferred deals and offer from the suppliers because of the volumes they can generate on their platform, promoting specific offers to customers like for hotels stay for 2 nights get 1 night free etc. all such offer enhances customers retention and engagement.

CRM:

Travel CRM (Customer Relationship Manager) help manage the customer information, bookings, his buying behaviour, interest etc. Helps OTA’s to categories customers and target them with specific offers and promotion with more probability for conversion and sales. Also give providing more satisfaction and brand loyalty to the customer.

Cache Management:

This comes handy when OTA have extensive customers volume landing on their website and checking the price to control look to book ratio and enhance customer experience OTA have an exhaustive Caching engine which they configure based on customer behaviour on their website. They can define the frequency of refreshing the cache let say every half an hour or couple of hour depending on the demand of given product. This is a must if you are working with Meta Searches Like Wego, Skyscanner, Kayak, Trivago etc. For customers they get results in few seconds and have a better user experience compared to the websites which take minutes to show the results.

Recommendation Engine:

This basically works on AI (Artificial Intelligence) & (ML) Machine Learning – Enormous data gathered by an OTA in evaluated by AI & machine learns about the customers behaviour, preferences, budget, time of purchase, destinations etc. converting all this information into actionable insight and recommend the products, services as per the customer taste. Case Study – Netflix.

Loyalty & Retention Management :

Loyalty & Rewards are very important to engage customer’s to the brand enhance its loyalty and engagement with the brands. The basic level Loyalty is the rewards points offered to the customers on the purchase from the OTA but there are multiple loyalty programs & tool like FFP – Frequent Flyer Programs, Points, gamification, gift cards, branded cards, Vouchers, affiliates, e-wallets, referrals, card link loyalty, campaigns, Closed Loop or Open Loop loyalty programs etc.

All such tools help OTA’s to engage more customers, increase repeat purchase, enhance brand loyalty and increase customers base.

Marketing:

Marketing is one of the tools that can decide the success or failure of your OTA brand, irrespective of how good technology you have invested into, how good rates you have, how good is the user experience on your website, etc. if you have not invested in Marketing (Online – SEO, SMO, SEM/PPC, SMM, Media buying or Banner-Adds, Traditional marketing – TV, Radio, Newspapers, Magazines, etc.), chances are your are doomed to failure. This is the major mistake majority of the startup OTAs do – they do not think of or have any marketing plan in place before they start to invest in technology. They are more concerned about what features and functionality should be there on the website than how they will market their website. Eventually sigh brands with a lack of vision and marketing road map struggles for a few years and eventually shut down their OTA business because making money from an OTA and to be profitable is not easy.

All the above tools points will give you basic overview of what all it takes to build an OTA platform but to make it successful you need to invest in marketing.

Please let me know if you need any more information, support related to the technology or marketing solutions.