THE EXPANSION OF OTA’s: BENEFITS AND RISKS
Mihaela TUDORICĂ
Doctoral School in Economic Sciences, Faculty of Economics Sciences, University of
Oradea, Oradea, Romania
Abstract: The aim of this paper is to analyze the advantages and disadvantages of OTA’s (Online Tourism Agencies). Many travelers today prefer OTA’s to look for advantageous tour packages and especially to make their reservations. They can make these reservations not only for accommodation but also for flights, excursions and why not, for other trips. OTA’s is an important component for a successful strategy, for all tour operators skilled in business. This way it helps them to reach more passengers and implicitly to make more reservations. But let’s not forget that paying a commission for each booking, it should balance the pros and cons. Due to intense competition, OTA is trying to remain financially sustainable. For this, however, it needs to involve its customers more, of course offering them superior value propositions. For this, however, a thorough understanding of consumption values is needed. The role of OTA’s is becoming more and more important due to the ease of customers to compose a trip from the comfort of their home where they can also compare hotel prices and booking the choice on the Internet. An OTA’s agency organizes and sells accommodation, excursions and transportation to customers. It also organizes trips on an online platform for travelers. These OTAs are third parties that sell services on behalf of other companies. As a rule, these OTA’s offer many benefits. They have more comfort and a more self-serving approach. They also include a built-in booking system with which you can make instant bookings. OTA’s works in two models: Merchant model and Agency model. Merchant model is the model in which hotels sell rooms to OTA’s at a reduced or wholesale price. OTA’s then sells them to customers at a markup price. Agency model is the commission-based model in which OTA’s acts as a distribution partner. OTA’s receives full commission after the stay, and the hotel receives payment directly from the last customer and does not wait for the transfer of payment from third parties.
Keywords: Online travel agency, OTA, tourism, consumption values;
