Online Travel Agency (OTA) Programs

Online Travel Market Overview

Most recent estimates by the leading market research firms peg the core U.S. travel market (i.e., airline, lodging/hospitality, car rental, cruise, tour, travel agency sales), at $270 – $300 billion (2008).   According to one leading market research firm, PhoCusWright (whose estimate of the U.S. travel market size comes at the lower end of the scale at approximately $272 billion), the U.S. travel market will experience annual growth rate of 2% in 2009 and 2010, despite the rather nasty recession that has engulfed the U.S. and the rest of the world.

More importantly, from an affiliate marketing perspective, PhoCusWright poses a much rosier picture for the online leisure/unmanaged business travel segment.  Specifically, this segment, which represents 36% of total U.S. travel industry sales ($98.2 billion in 2008), is projected to grow at more than triple the rate for the overall travel market, generating year-on-year growth of 7% through 2010.  Another market research firm, eMarketer, is more aggressive in its projections; they estimate 2008 leisure/unmanaged business travel sales of $105 billion, and expect sector CAGR of about 11.5% through 2012, when total sales is expected to surpass $162 billion.

PhoCusWright estimates 2008 European core travel market sales (the world’s largest regional market) at €246, with online leisure/unmanaged business travel bookings accounting for 29% of total spend, or roughly €71 billion.

The Asia Pacific online market remains in an embryonic mode, but growing rapidly.  According to EyeForTravel’s The Asia Pacific Online Travel Report 2007, total online sales are expected to reach $55 billion by 2010 from a base of about $25 billion in 2007.

Online Travel Market Structure

Regardless of which set of numbers you choose to work with, or which geographic region you operate in, to better understand the affiliate marketing opportunity in online travel, it is important to note how the industry characterizes itself.  Essentially, the travel industry is divided into two segments: managed business travel (also referred to as corporate travel), and leisure/unmanaged business travel.  As noted by eMarketer, JupiterResearch, PhoCusWright and many other market research firms, the online research and booking behavior of unmanaged business travelers and leisure travelers is essentially the same. “Employees of the millions of small- and medium-sized corporations in the U.S. use the same websites as leisure travelers to book their business travel. Thus these two groups of buyers are treated as one customer segment”, says Jeffrey Grau of eMarketer.

Another key similarity between these two types of online consumers is that these travelers hold little brand loyalty – either to the travel supplier or the intermediary / retailer. Thus, unlike their managed business traveler counterparts, the leisure/unmanaged business travelers’ wallets seem to be always ‘up for grabs’.

Opportunities for Travel Affiliate Marketers

What makes the leisure/unmanaged business travel statistics and characteristics cited in the preceding paragraphs even more impressive (and of utmost strategic importance for travel affiliate marketers) is that this segment is the most hotly contested in the online travel industry; both travel suppliers and intermediaries like online travel agencies (OTAs), travel consolidators (air, hotel or car), and comparison shopping travel sites (e.g., kayak.com, travelzoo.com) are vying for the same ‘independent’ travel consumers. Here’s where it gets interesting if you are a travel affiliate. In an effort to blunt the other’s leisure/unmanaged business traveler customer acquisition initiatives, travel suppliers and OTAs are increasingly looking at performance based marketing to help attract and convert these ‘unaligned’ travelers.

Travel Dividends believes that travel affiliate marketers have an unprecedented opportunity to leverage this unique competitive situation and enter into ‘no-lose’ affiliate programs with both sets of players.

However, of the two, the OTAs offer the best financial upside…here’s why:

?   As the economic malaise deepens and demand for travel plummets, travel suppliers and OTAs will in turn ratchet down their product price points while simultaneously increasing their commissions and incentives to affiliate marketers

?   Unlike most supplier affiliate programs which generally offer just the supplier’s own products and services, OTAs offer a broad array of travel content, from air to cruise to vacation packages; thus the opportunities to sell multiple products to the same traveler is amplified through OTAs

?   Although few U.S. airlines offer travel affiliate programs, affiliates can generate revenue even on those airlines that eschew the affiliate channel (e.g., American Airlines, Continental, USAir) by channeling their traffic through OTA affiliate programs, as OTAs will pay affiliates a commission on just about every airline booking

?   Affiliates have the choice of directionally selling to either the OTA or airline, depending on which merchant’s program makes the most sense economically…in many cases, OTAs offer better commission levels

Think we’re alone in our assessment?  If you answered ‘yes’, you may want to think again; according to Travolution, one of the UK’s leading travel wires, “Expedia UK’s fledgling Travel Agencies Affiliate Program has set a target of attracting at least 1,000 UK agents to its scheme by the end of the year.” In our view, Expedia’s action is just the first of many similar travel trade initiatives yet to come.

Online Travel Agency Overview

Online Travel Agencies (OTAs) are the Internet equivalent of bricks-and-mortar travel agencies; they provide consumers with online availability and reservation capabilities for  a wide range of travel products, including airline tickets, hotel and resort rooms, car rentals, cruises, vacation packages, and various other leisure and business travel services. While their business model is built on the principle of self-service, most OTAs also operate a call-center staffed with customer service representatives / reservationists to handle more complex travel requests or service problems on behalf of their customers.

As a group, the compensation levels typically offered by OTAs to affiliates for referring leads or driving bookings for much of their product line (e.g., air, hotel, car rental) is rather low; this is reflective of the commodity-type product that is being sold.  However, travel affiliates can earn higher commissions for more higher-value, more expensive travel products (e.g., cruises, package tours).

The U.S. OTA market is highly concentrated, as four companies, or ‘the Big 4′ as we like to call them, along with their subsidiaries collectively hold more than 97% market shareThe Big 4 are: Expedia, Inc (expedia.com, hotwire.com), Sabre Holdings (Travelocity.com, Lastminute.com), Orbitz Worldwide (orbitz.com, cheaptickets.com) and Priceline.

OTAs in Europe account for 34%, or approximately €27.4 billion, of the €71 billion in total online in leisure/unmanaged business travel bookings.  The competitive structure and market characteristics of the travel industry in Europe vary by country; therefore generalizations about OTA market share and positioning are not possible. Suffice it to say that in the more mature markets like the UK, OTAs have almost mirrored their US counterparts, as the top 5 online companies – expedia, Lastminute.com, ebookers, booking.com and Opodo.com –  control more than 75% of OTA market share, and have captured about 25% of total online sales (€5.7 billion).

Lastly, and perhaps most importantly for travel affiliates, the vast majority of OTA sales and revenues are generated by leisure/unmanaged business travelers – the same customers you serve!

Major U.S. and International OTAs

The OTAs we profile below have long offered travel affiliate programs and have a proven history of success with affiliates/publishers.  The travel content on most of these sites tends to be similar, as each typically offers virtually all of the major airlines, cruise lines, hotel, car rental and rail companies.  All also offer an extended content base of independent hotels, as well as tour operator and wholesaler travel packages, 2nd and 3rd tier car rental firms and other travel related services, though this product mix typically varies by OTA.  Virtually all OTA technology is solid and generally very extensive, with several players offering travel affiliates everything from booking engines to widgets.

The Big 4′ OTA Players

1. Expedia, Inc.

?   Expedia.com -Expedia Inc., through its own Expedia-branded websites and related travel subsidiary companies (which include such well known online travel brands as Hotels.com, Hotwire.com, and TripAdvisor.com) reported sales of more than $21 billion in 2008, almost double that of its closest competitor (Sabre’s Travelocity.com and associated brands), with revenues topping $2.9 billion.

Expedia Inc’s clear leadership extends to its share of U.S. OTA travel search traffic.  According to Compete, Expedia.com (Expedia) gets 26% of all paid and natural searches that flow to OTAs, followed by rivals Travelocity, Orbitz and Priceline (which, for contrast purposes, gets about 12.5%). Adding Hotels.com’s and Hotwire.com’s traffic to Expedia’s number brings the total for Expedia companies to an astounding 43% market share of all travel search!

Expedia offers travel affiliate marketers the opportunity to avail themselves with what arguably is the broadest travel content offerings in the OTA space; their hotel inventory spans more than 70,000 properties around the world, and they pioneered the concept of online travel packaging in the U.S., from which Expedia – and many travel affiliates who work with Expedia – still derive much of their profits. Additionally, Expedia branded Web sites feature access to many in-destination services through Expedia!fun branded activity desks, as well as other at-destination activity services providers.

Operating branded sites around the world, including the UK, Germany, France, Italy, The Netherlands, Australia, to name a few of their international operations, Expedia.com is the undisputed heavyweight in the OTA sector.

For more information about Expedia.com’s U.S. travel affiliate program click here.

If you’re interested in their UK offering, here’s their link.

?   Hotwire.com - One of Expedia’s sub-brands, Hotwire is unique in that it operates an ‘opaque’ travel pricing and booking model.  Opaque models enable price-conscious consumers to shop for travel on price (versus brand), while at the same time allows suppliers to sell their excess inventory (e.g., airline seats, hotel rooms, rental cars, etc) through a “brand-shielded model”, thus enabling suppliers to maintain overall pricing integrity for their inventory.  As Hotwire notes:

“This booking model makes it possible for Hotwire.com to provide travel at significant discounts and to help airline, hotel, and rental car partners attract new customers and achieve incremental sales. Hotwire has recently added a “semi-opaque” feature, offering customers additional information about their travel details, while still providing a discount to regular fares.”

According to the J.D. Power and Associates 2008 Independent Travel Web Site Satisfaction Study, Hotwire.com ranked highest in customer satisfaction for independent travel web sites for a third consecutive year…quite the accomplishment given that in the mind of some consumers, OTA customer care programs leave a lot to be desired.

To assess whether Hotwire’s affiliate program is right for you, check out their offering here.

2. Orbitz Worldwide

?   Orbitz.com – Funded and developed by several of the leading U.S. airlines back in the heyday of the dot.com era in the late 1990s, Orbitz.com (Orbitz) has changed hands several times since its inception.  Most recently, Orbitz was bundled together with cheaptickets.com, ebookers.com, hotelclub.com, ratestogo.com and several other internationally-based online travel companies to form Orbitz Worldwide, and then promptly taken public in an IPO.

The originator of the side-by-side airline fare comparison model, Orbitz was designed to mimic the booking logic of an airline reservation system. That worked well at first, but Orbitz soon found itself at a competitive disadvantage to its more content-rich competitors.  To make-up for the lack of broader travel content, Orbitz made significant strides over the years and built-out its business model, both in terms of expanding the breadth of its travel content as well as recasting its underlying airline-centric technology platform. However, despite these efforts, Orbitz sales continue to be more airline ticket dependent than competitors Expedia, Travelocity or Priceline.

Currently the fourth largest U.S. OTA by sales volume, Orbitz has focused significant resources towards in building its customer care program (Orbitz TLC), to help distinguish itself from its competitors. They also offer private label solutions and travel distribution technologies to third-parties, which enable airlines, hotel companies, and other online travel players to operate websites under their own brands or the provide the ability to access and sell Orbitz airline inventory, vacation packages and cruise inventory.

Click on this link to learn more about Orbitz and its travel affiliate program.

?   Cheaptickets.com – Subsidiary of Orbitz Worldwide and U.S. sister company to Orbitz.com, ebookers.com, hotelclub.com, and ratestogo.com, among others, Cheaptickets is the 5th largest OTA in the U.S. Offering similar content to Orbitz, though as their name indicates, they focus on airline tickets.

Think Cheaptickets makes sense for your travel portfolio?  Click here to find out more.

?   Ebookers.com - This Orbitz Worldwide subsidiary is a leading pan-European OTA (operates national sites in 13 countries) specializing in air deals, although it does offer a full range of travel products including hotel, car hire and package tours, both online and via the telephone through it many call centers located throughout Europe.

To find out more about all that ebookers offers to its travel affiliates, check out their affiliate page.

3. Travelocity / Sabre Holdings

?   Travelocity – One of the very first online sites of any stripe (travel or non-travel), Travelocity can trace its heritage back to the 1985 (years before Mosaic, the first browser was invented), when it was known as EasySABREToday, Travelocity remains a subsidiary of Sabre Holdings, and is the second largest OTA both in the U.S. and globally.

Like its main competitors, Travelocity markets and distributes a broad array of airlines, hotels, car rental companies, cruise lines, vacation and last-minute travel packages, and other travel-related services to travel consumers.

Travelocity operates branded sites 3 international markets (The UK, Canada and Denmark), and works seamlessly with sister OTAs that are among the market leaders in the UK (Lastminute.com); Sweden, Norway, and Denmark (Resfeber); and Asia Pacific (Zuji.com); please note that we include overviews of both Lastminute and Zuji below.

The last year that Travelocity reported any financials was in 2005; that year, gross travel booking sales, including results from both lastminute.com and Zuji, surpassed $7.4 billion, and generated revenues of $830 million (Note: Sabre was taken private by private equity firms TPG and Silverlake Partners in 2006).

Here’s the link to Travelocity’s U.S. affiliate program.

?   World Choice Travel (WCT) – Travelocity also owns World Choice Travel, which offers scalable, private-label travel solutions that allow travel suppliers or travel affiliates to leverage Travelocity’s content, while building their own comprehensive online travel portal based on a WCT designed XML platform. Travelocity characterizes WCT as:

“…the Web’s most powerful suite of online booking products. World Choice Travel is the most popular online private-label travel partner program in the world due in large part to this unique relationship. . The WCT-Travelocity revenue share is generous and our partner support leads the industry.”

WCT boasts some 2,400 affiliates who operate more than 6,000 Web sites with its private label booking engine in 42 countries around the world.

You can explore all the details and benefits of World Choice Travel’s private  label travel affiliate program at this link.

?   Lastminute.com - A subsidiary of Travelocity, Lastminute.com is Europe’s leading independent online travel and leisure group.  According to owner Sabre Holdings “…Lastminute provides access to airline tickets, hotel rooms, holidays, car hire, entertainment tickets, restaurant reservations and food delivery, specialty services, gifts and auctions. Lastminute.com operates directly in fourteen European countries and participates in three international joint ventures. Lastminute.com owns and operates online brands including holidayautos.com, travelprice.com, travelselect.com and exhilaration, among others.”

Lastminute also operates a U.S. site, Lastminute.com (formerly, the site59.com), which focuses on enabling consumers to dynamically create travel packages and quick travel ‘getaways’.

Like Travelocity, Lastminute also offers its own travel affiliate program and a white label program through sister company World Choice Travel.  Both programs are solid options for travel affiliates looking to make money in the travel space “on either side of the Pond.”

If you would like more information about Lastminute’s branded travel affiliate program, here’s the link; or, if you are interested in Lastminute’s WCT white-label program travel affiliate program, click here.

?   Zuji.com - Billing itself as “Asia Pacific’s most comprehensive online travel company”, Zuji.com offers some 400 airlines, 60,000 hotels, 3,000 activities and attractions as well as offering package tours, cruises, car hire, and other travel products online.

Also a brand under the Travelocity / Sabre Holdings umbrella, Zuji operates branded websites in Singapore, Hong Kong, Taiwan, Australia, Korea and New Zealand.

To find out more about Zuji’s travel affiliate program, click here.

4. Priceline, Inc.

?   Priceline.comPriceline operates online travel companies in the U.S., Europe, and Asia. Like its major competitors, Priceline.com provides various travel services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises, as well as parking, event tickets, ground transfers, tours, and other services available at various travel destinations.

In the U.S., priceline.com offers travel consumers a traditional OTA model with a price-disclosed booking option, or their famous ‘Name Your Own Price’ service (their version of the opaque pricing model), which allows would-be travelers to make offers for travel services at discounted prices.

Additionally, Priceline.com operates one of Europe’s fastest growing hotel reservation services through several subsidiaries – Activehotels.com, Activereservations.com, Bookings.net and priceline.co.uk –  which have been largely responsible for much of Priceline, Inc’s recent financial success; several North American travel web sites (Travelweb.com, Lowestfare.com, RentalCars.com and BreezeNet.com); and is a major investor in the Priceline websites that operate in Hong Kong and Singapore.

To assess if priceline.com’s travel affiliate program fits with your travel portfolio, check out their affiliate page.  You can also avail yourself of many of Pricline’s subsidiary companies’ affiliate programs such as travelweb and lowestfare by joining priceline.com’s affiliate program.

The ‘Best of the Rest’

While there are numerous other OTAs plying their trade on the Internet in the U.S., Europe and Asia Pacific, Travel Dividends believes these four stand -out from the pack.

?   OneTravel - Offering pretty much the same content that other OTAs proffer, what makes OneTravel relatively unique is the way that they present their content to travel consumers. Specifically, rather than extolling products or features as do virtually all other OTAs, OneTravel takes a customer segmentation approach to differentiate its offerings.

For example, here’s how OneTravel describes itself in the first paragraph of their ‘About’ page:

Our Specialties

-  Business/First Class Travel
-  Gay & Lesbian Travel
-  Student Travel
-  Senior Travel
-  Ethnic Destinations – India
-  84,000 Discount Hotel Rates
-  Discounted Packages and Vacations to all world wide destinations

Given the huge advantages in brand recognition and marketing muscle ‘the Big 4′ have, we think OneTravel’s approach is pretty smart; now if they only had the marketing dollars to support their new positioning…by way of comparison; Expedia spends around 35%-37% of revenue on marketing, or about $1 billion (yikes!).

In April 2009, OneTravel startled many veteran travel and affiliate marketing industry observers when the company announced their new affiliate payment policy – OneTravel will pay affiliates at the time of booking, not after the traveler has completed their trip, as has historically been the norm in the travel affiliate industryIf the major OTAs match OneTravel’s competitive salvo, this could bring about a new era in travel affiliate marketing. Travel Dividends – and we suspect many others in the travel affiliate industry – will be closely watching this space.

Like their larger competitors, OneTravel offers both a traditional travel affiliate program for publishers that want to leverage the OTA’s booking services to monetize their traffic, and a private label program, TravelSpot, which provides affiliates with a booking engine that allows access to OneTravel’s inventory and low rates while retaining their own branding.

To determine if either of OneTravel’s travel affiliate options is right for your business, check-out their affiliate homepage.

?   CheapOair.com – A scrappy up-and-comer in the OTA space, CheapOair prides itself on its veteran leadership and focus on the budget travel niche; it notes on its ‘About’ page that “…[CheapOair] is comprised of dedicated travel professionals, each with over 25 years in consumer travel and tourism. Together, they shape the vision of CheapOair, to provide a wide selection of travel products and services for today’s budget conscious traveler.”

To back this up, they offer many of the same products and services that the larger OTAs provide, as well as touting the availability of:

“…over 18 million exclusive flight deals, wholesale net air fares, international air tickets with discounts up to 65% off published fares, last minute special fares low airfare guarantees, and 84,000 negotiated hotel rates and the technological foundation to deliver affordable tickets to every region in the world.”

It is important to note that the source of these ‘exclusive fare offers’ is from an airline consolidator – which we believe to be BizTravelDeals.com, who also happens to be CheapOair’s owner.  We also believe – but have not been able to verify – that both companies are owned by Fareportal, Inc., which also happens to be the holding company that owns TravelSpot, the private label booking engine used by OneTravel.

Regardless of their lineage, CheapOair.com was recently ranked by Hitwise as the #7 U.S. travel agency based on monthly average market share, quite an accomplishment for an OTA that was established just a few short years ago (2005).

Their travel affiliate program is quite similar to OneTravel’s in that they offer both the traditional affiliate programs for publishers and, not surprisingly given the apparent ownership linkages to Fareportal noted above, use TravelSpot to provide the private label booking engine option.  Information for both programs can be found here.

?   CheapCaribbean.com – As its name indicates, this travel website broadly focuses on the Caribbean region and seeks to offer travel consumers the most price competitive hotel and package tour products available in its key markets -the Caribbean, Mexico and Bermuda.

Somewhat of a late bloomer in the online space (the company started in 2000), they have earned a stellar reputation among travel consumers and the travel trade for the breadth, quality and pricing of their various products (which also includes cruises, air and even Las Vegas packages!).

CheapCaribbean’s motto is “Luxury for Less”, and we think they deliver on that pledge rather consistently. We also like the fact that they encourage travelers to book either online or over the telephone…many travelers still prefer to book higher-valued travel with a ‘real person’, rather than alone in cyberspace. For affiliates, the good news is that the commissions associated with the sales you bring to CheapCaribbean are paid regardless of the channel eventually used by your customer to make his/her reservation.

To learn more about CheapCaribbean, the elements and benefits of their travel affiliate program, and how you can earn money working with them, click here.

Print This Page Print This Page