Sanjay is a Technologist and founder of Vervotech, a SaaS-based accommodation data provider. He also founded techspian.
In my last piece, I talked about different types of travel agencies. And we’re all aware of the emergence of online travel agencies (OTAs) and how they’ve eased the distribution of travel products. Continuing that discussion in this article, I’ll walk you through the critical modules that make OTAs successful in selling hotel stays on their websites.
Over the last two decades, OTAs have done an excellent job filling the much-required gap between travelers and suppliers. They also managed to seize a significant amount of travel demand for themselves. Fortunately, I’ve seen this transition and have been a part of this transformation.
When it comes to booking a hotel online, I witnessed three consumer preferences that laid the foundation for the success of OTAs. First is the consumer’s insistence to have variety and choices at their disposal. The second is price consciousness. This transcends geographies—the consumer always wants to price shop and compare to get the best deal possible. And the third is an excellent user experience (UX), which should successfully incorporate the first two (choices and prices) preferences.
Thus, the industry of OTAs is built on primary human responses, and I don’t see this changing any time in the future. And to take care of the preferences listed earlier, OTAs have to implement certain technologies to keep their businesses running. So, what powers this industry, and what are the technologies OTAs need to succeed? I’ll give you a brief walk-through of the top eight technologies and share my opinions and experiences.
1. Hotel Aggregation Platforms
OTAs have agreements with individual hotels, wholesale suppliers and global distribution systems (GDSs), which allow them to sell different travel products at specific prices. Therefore, OTAs need a solution to manage this data on a single platform that searches their entire inventory and produces only requested data. Hotel aggregator platforms do this for OTAs. The aggregators primarily extend their services through APIs.
2. Back-Office Systems
The back-office software in an OTA works at the heart of an organization. It performs many critical functions, including inventory management, supplier management, establishing business rules and the core logic behind business decisions, analytics, metrics and numeric reporting of the business, employees and customers.
3. Hotel Mapping And Room Mapping
OTAs source hotel data from multiple suppliers, partners and aggregators, so the odds of getting duplicate, incorrect or incomplete data from these sources are incredibly high. They use hotel mapping tools to avoid duplicate entries and hotel listings with conflicting information. So, the mapping tools help OTAs organize, curate and structure their hotel content across all their suppliers.
Like hotels, when OTAs source room data from multiple channels, the probability of getting botched-up room data is also high; there could be rooms with missing amenities, policies or pictures, as well as duplicate rooms. Room mapping tools help OTAs organize room data to make it presentable to customers.
4. Rich Hotel Content
I previously discussed variables like pictures and amenities. The mapping tools help OTAs organize these components. Yet, there must be a solution that accurately supplies these components. That’s when rich hotel content solutions can come into play. The solutions provide all the hotel contents, such as reviews, images, social proof and attractions, which ultimately drive purchase decisions.
5. Revenue Management Systems
Revenue management systems help OTAs with pricing decisions. The prices in the travel market are always related to outside factors, like the sentiment in the market, speed of economic activity, festivals, sporting events and many other intangible factors. So, pricing needs optimization through better forecasting and demand planning. Revenue management systems can do this job for OTAs.
6. POS Reconciliation
OTAs need a point-of-sale (POS) reconciliation system to do complex accounting and maintain the checks and balances of their business. POS reconciliation is a classic accounting task of comparing two sets of records against one another to ensure there’s no discrepancy or leakage in the business process. With a POS reconciliation system, OTAs can flag discrepancies and quickly fix them.
7. Post-Booking Confirmation
A post-booking confirmation tool can be essential in validating the bookings of various travel products made on your platform. Validation is important in various instances, such as when consumers book a travel product, a customer’s payment details are unavailable on your system or there are multiple bookings under the same name. Also, in the case of hotels, without validation, two different customers might show up for the same room. To avoid such bad customer experiences, consider a post-booking confirmation tool.
8. Smart Websites
OTAs became popular because they eased end users’ access to travel products. Responsive websites that quickly recognize visitors’ devices and optimize their page configurations to offer the best UX drive bookings. Also, travel agency websites with intelligent payment gateways offering features like “lock price” and “book now, pay later” tend to do better than the websites that provide only conventional payment options.
In the last two decades, OTAs have come a long way. They help ensure that consumers have the best experience with travel products with minimal effort. OTAs also can provide a solid revenue stream for the suppliers of travel products.
OTAs are no longer intermediaries between suppliers and consumers. Instead, they’re entities that create a healthy equilibrium in the travel market. And it’s the technologies and systems at the back end that powered this OTA revolution. Technology deserves the lion’s share of credit behind the success of OTAs.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
China’s Visa and Passport Backlog Obstructs Business Travel Reboot
Four ways to humanize your relationship with every client: Travel Weekly
Travel Agents and Tour Operators Have Generative AI Opportunity