OTAs gain bigger market share of web booking conversions

WORLDWIDE Hotel websites lost ground to online travel agencies in the first half of last year on a percentage of bookings basis, according to a new PhoCusWright report. The supplier share of unique monthly hotel bookers declined as OTAs benefited from price-conscious comparison shoppers.

Hotel websites generally commanded between 67% and 72% of monthly online hotel bookings in 2008 and 2009, with OTAs representing the balance. In the second quarter of 2010, however, hotel website share dropped substantially, to between 57% and 69%. A less dramatic shift to the online travel agency channel was also seen among air bookers.

Both traffic and conversion played a role in the share shift. Although supplier websites and OTAs attracted fewer visitors in the second quarter versus 2009, supplier category visitors declined more than OTA shoppers. Supplier conversion rate losses played an even greater role.

While supplier websites have historically been able to drive substantially higher conversion rates than OTAs across products, an overarching trend has appeared over the past few years: OTA conversion has improved while supplier conversion has declined.

“The drop in conversion rates among airline and hotel websites was likely the result of supplier-driven price increases,” says Carroll Rheem, director of research at PhoCusWright. “The return of corporate travel prompted suppliers to raise rates, but it appears that leisure consumers were not so ready to pay those higher prices, and online travel agencies reaped the benefits of their sensitivity.”

Although 2010 brought increased revenue across airline and hotel products, traffic to most transactional categories declined. Traffic is expected to increase in 2011 as leisure travel rebounds, and suppliers will have to play a careful balancing act to regain lost share while raising prices.

PhoCusWright’s Online Traffic and Conversion Report Second Edition studies traffic and conversion rates—two critical online consumer-behavior metrics. The report analyzes major categories within the travel vertical, including both transactional and non-transactional sites. Individual products, such as air, hotel and car rental, are tracked to explore the dynamic between supplier sites and OTAs, as well as how non-transactional sites, such as deal publishers and review sites, affect conversion.

A copy of the in-depth report is available for purchase here for US$995.