There are many different ways to book travel. You can book through a travel agency, you can book directly with the airline or hotel yourself, or you can book with an OTA. First, let’s take a look at what an OTA is.
What is an OTA?
Online travel agencies, or OTAs, are pretty much what they sound like: websites that let you book flights, hotels, rental cars, activities, and/or vacation packages. For example, if you’ve ever used Expedia, Orbitz, Travelocity, Hotels.com, or Hotwire, you’ve used an “OTA (Fun fact: All five are owned by the same company)” banking websites that you use your credit card reward points to book travel (such as Chase’s UltimateRewards.com or Citi’s ThankYou.com) are also OTAs.
Why do people use OTAs?
People use OTAs for a variety of reasons. Here are some of the most popular reasons why OTAs are used.
- Some OTAs have rewards programs that give you a percentage of your purchase back in points that can be used towards future trips, and many also partner with cashback websites, allowing you to earn additional rewards. Hotels.com, for example, has a rewards program that offers you one night “free” after a ten-night stay. It’s actually not a completely free night, but “rather” 10% of the average price of the ten nights you stayed.
- Sometimes OTAs offer prices that can’t be found anywhere else, especially for special hotel rates (such as those that include breakfast), travel packages, or “false” rates. Error fares are when an airline or OTA accidentally offers a flight for a huge discount.
- OTAs can offer a more generous cancellation policy – for example, Priceline allows you to change or cancel an airline ticket without penalty until the end of the next business day after booking, while US airlines only allow it within 24 hours of booking (and foreign airlines can allow no free changes or cancellations at all for flights not subject to US regulations).
- Some travelers may not have a choice of where to book their flights. For example, if you book with credit card rewards points, in some cases you will be tied to that booking portal.
- OTAs can also make it much easier to compare different rates. To see how much it costs to fly from Denver to Chicago, it would take a lot of time to go to each airline’s site individually. An OTA allows you to quickly compare most of your options.
When is it better to book directly?
While OTAs offer quite a few benefits, you may not always want to book through one. Sometimes it makes more sense to book directly with the airline or hotel. This is when you should consider booking direct.
- If you think you need to change your itinerary. Earlier this year, the New York Times reported on the tragic story of a woman who lost the chance to see her mother one last time because the OTA had booked her ticket by canceling her reservation after being informed of a last-minute ticket change through the airline. While these types of experiences are rare, booking through an OTA often forces you to make changes through the OTA, which has fewer customer service representatives and less authority to make exceptions than an airline reservations department.
- If you are staying in a hotel chain and want to earn points or enjoy elite member benefits. Since hotels are required to pay commissions to OTAs for reservations booked through them, most major hotel chains such as Marriott/Starwood, Hilton and IHG only award hotel reward points for bookings made directly through their website, and will also only grant elite benefits such as upgrades , free parking or lounge access with direct bookings. Also, some chains (like Starwood) only offer free WiFi to loyalty program members on direct bookings and will charge you full price for internet access if you book through a third party.
- If you have a company discount or other special rate. Large corporations and other institutions have often negotiated rates with hotels or hotel chains, and it is common for hotels to offer special rates for AAA members and government employees. Some credit cards may also offer special rates, for example the Fine Hotels & Resorts program offered to American Express Platinum and Centurion cardholders. In addition to lower prices, these negotiated rates often have additional benefits and a more generous cancellation policy than the standard pre-offered rates offered online and through OTAs. These types of discounts are typically only available when you book directly with the hotel, or through a live human travel agency or corporate booking portal.
- If you found a lower price elsewhere. This may seem counterintuitive, but many hotel chains have a version of a “best price guarantee” that says that if you find a lower price for the same room on another website, they will match it and give you some sort of extra compensation – an extra discount , bonus points or even a free night. As you would expect, these guarantees are full of limitations and the biggest is that the lower price must have the exact same terms and conditions as the price available on the hotel’s website, including room type, cancellation policy and sometimes even deposit requirements. Although they have become less and less generous over the years, in some cases it is still possible to find excellent value.
OTAs play an important role in modern travel, and there are certainly times when booking through one is the best option. However, there can also be many drawbacks, especially when it comes to making changes or enjoying elite status. So make sure you have a complete picture before choosing where to book your next trip.