Online Travel Agencies (OTAs)

Do OTAs Have the 'House Advantage?' or Do Advisers? - Travel Weekly

Excerpt from Travel Weekly

Similar to the giant balloons that will rise above the high school marching bands and floats that carry celebrities through the streets of Manhattan in the Macy's Thanksgiving Day Parade, a philosophical framework hovered over the parade of presenters who took the stage at the annual Phocuswright Conference last week in Los Angeles.

This year's overarching theme was "Power Paradox." Mega-OTAs like Booking.com and Expedia, as well as media giant TripAdvisor, have obvious advantages over smaller competitors, but their scale means their weaknesses are also amplified. Expectations and complications grow alongside revenue, so if performance lags, they must, as TripAdvisor is currently doing, make painfully public and risk-laden pivots.

And smaller rivals are not without advantages. Phocuswright senior director for research Maggie Rauch drove the point home, reviewing the extinction of big, lumbering dinosaurs that, when faced with a catastrophic crisis, were ill-equipped to find the small, niche paths to survival that birds and mammals were able to exploit.

The irony of the example ­-- Expedia a dinosaur? -- could not have been lost on legacy travel agency executives who time and again had endured similar comparisons early in the history of this 23-year-old travel-tech conference.

Indeed, the leading legacy sellers of travel at the dawn of the web, American Express and Carlson Wagonlit, were surpassed on the Travel Weekly Power List a decade ago by OTAs, but they have nonetheless managed to hold on to spots No. 3 and No. 5, respectively. Perhaps more to the point, many "traditional" agencies on the list are less than 20 years old.

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