What is an OTA?

What is an OTA?

An Online Travel Agency (OTA) is a digital marketplace where consumers can search, compare, and book travel products—primarily hotel rooms, flights, and vacation packages. For hotels, OTAs are both a source of demand and a source of tension: they drive bookings but charge high commissions (typically 15–25%).

Examples include Booking.com, Expedia, Agoda, Hotels.com, Orbitz, Travelocity, and Priceline.

A Brief History of Major OTAs

Booking.com (Netherlands, 1996)

• Founded by Geert-Jan Bruinsma in Amsterdam.

• In the early days, confirmations weren’t automated—Bruinsma literally faxed reservations to hotels from his apartment. This scrappy approach got traction with hoteliers who were hesitant about online distribution.

• Booking.com merged with Bookings Online in 2000, then was acquired by Priceline Group (now Booking Holdings) in 2005 for just $133M. Today, it drives hundreds of billions in bookings annually.

• Booking.com dominates the European market and has strong penetration globally.

Expedia (U.S., 1996)

• Born inside Microsoft as one of the first online travel booking platforms.

• Spun off in 1999, acquired by Barry Diller’s USA Networks (IAC), and later rebranded as Expedia, Inc.

• Grew aggressively through acquisitions: Hotels.com (2002), Orbitz (2015), Travelocity (2015).

• Today operates under Expedia Group, with brands spanning OTAs, metasearch, and B2B distribution.

Agoda (Thailand, 2005)

• Started as PlanetHoliday.com in the late 1990s, rebranded to Agoda in 2005.

• Focused on Asian markets and mobile-first booking.

• Acquired by Priceline/Booking Holdings in 2007, giving the group a strong foothold in Asia.

Hotels.com

• Founded in 1991 as Hotel Reservations Network, a call center for discounted hotel bookings.

• Pivoted online in 2001 as Hotels.com.

• Acquired by Expedia in 2002, it remains one of Expedia Group’s strongest consumer brands.

Orbitz & Travelocity

• Orbitz (2001) was a joint venture of major U.S. airlines to compete with Expedia.

• Travelocity began in 1996, spun out of Sabre, a global distribution system.

• Both were eventually acquired by Expedia Group in 2015, consolidating the U.S. OTA market.

Priceline (U.S., 1997)

• Famous for its “Name Your Own Price” bidding model, pioneered by Jay Walker.

• Acquired Booking.com in 2005—arguably the smartest acquisition in travel history.

• Priceline’s brand power waned, but the parent company renamed itself Booking Holdings in 2018 to reflect its true growth engine.

The Holding Companies Today

• Booking Holdings (U.S.)
  Brands: Booking.com, Priceline, Agoda, Kayak (metasearch), OpenTable (restaurants).
  Strength: Europe and Asia; direct booking dominance.

• Expedia Group (U.S.)
  Brands: Expedia, Hotels.com, Orbitz, Travelocity, Vrbo (vacation rentals), Trivago (metasearch).
  Strength: North America; multi-brand reach.

• Trip.com Group (China)
  Formerly Ctrip, founded in 1999.
  Brands: Trip.com, Skyscanner, Qunar.
  Strength: Chinese outbound travel, Asian markets.

Why OTAs Matter for Hotel Owners

• Demand Engine: OTAs bring exposure, especially in markets where a hotel’s own marketing reach is limited.

• Costly Channels: Commissions (15–25%) reduce margins compared to direct bookings.

• Parity Clauses: Many OTAs historically required “rate parity” (same rates as the hotel’s own site). These have been challenged in courts, especially in Europe.

• Data Access: OTAs hold rich guest data but rarely share it with hotels, limiting loyalty efforts.

• Global Distribution: For many independents, OTAs are the only way to get visibility in foreign markets.

Biggest Issues to Look Out For

• Pricing/parity control - there are different levels of parity enforcement but any level of parity enforcement puts the hotel in a difficult position not being able to offset the commission with a higher price. Often having to decide between visibility and distribution of the OTA and making any profit what-so-ever.

• Commoditization of your product - with many OTAs not allowing you to even write your own description, it is hard to stick out using anything other than price creating a race to the bottom.

• Walled Garden of guests data - OTAs want their commission so they will use language detection to remove any forms of direct communication on their platform, anonymize your guests email address, and pressure you into offering things such as a value-add, room upgrade, or special pricing exclusively to OTA customers ensuring that guest never becomes a direct customer.

Need help dealing with OTAs and making these extremely hard decisions? Feel free to reach out and the MHS can help guide you with data driven insights and OTA insider knowledge.