Do Travellers Book Hotel From An Airline Website? Answer is a strong YES

1 December, 2012   Airline Business, Hospitality Business, Interesting Facts, Thought Leadership, Trips and Tips   4 Comments

OTA and Airlines Website - Hotel Booking - TravopiaIn travel industry, the one question that can never be certainly answered is – Who eats who? By ‘eat’, we mean the marketshare. We will keep things simple and say that – In the year 2000, Online Travel Agencies (OTA) took a major marketshare from offline Travel Agents, and now (post 2010) Airline websites are posing a serious threat in taking over marketshare from OTAs. This is seemingly becoming evident in the last couple of years.

In early days, why a traveller went to a OTA website like Expedia, Travelocity, Orbitz to book something? It’s because of the number of choices and ‘i-can-book-all-i-want-in-one-place’ thing. To put it otherwise, OTA was the one-stop-shop for travellers. But, in the recent years, the industry has changed. Leave alone all the distribution complexities and various other channels, the one thing that gives a tough fight for OTAs is the airlines website.

Nowadays, most of the airlines offer non-air products on site. Ancillary revenue has become a must to stay competitive and be profitable. Airlines offer services like hotels, car, cruise, insurance etc. Best part is all these can be booked right in the airline website. The ‘one-stop-shop’ concept of an OTA is also now replicated by the airlines through their website.

In this article, lets discuss only about hotel reservations in airlines website.

British Airways:

Jet Airways:
United Airlines:

Majority of the airline websites allow the travellers to book hotels. But, the question that would cross our mind is, why would a traveller book a HOTEL from an AIRLINE website? Though it doesn’t sound convincing, there are enough evidence in the market that this is happening. The trend is being set.

Ryanair, primarily an airline company launched Ryanairhotels.com and they are successful in getting hotel reservations on their hotel website. To quote a number, Global Alexa Ranking of Ryanair is ~1500, and Ryanairhotels is ~3200. Going by this number, one can infer that ~50% of Ryanair traffic is flowing to Ryanairhotels.

According to a report by SITA in 2010, travellers using airline websites to book accommodation spiked  from 21% in 2009 to 38% in 2010.

SITA’s Passenger Self Service Survey 2011 says that 25% travellers who booked flight from an airline website also booked hotels, and 55% have shown interest in reserving a hotel in airline website.

A recent report (2012) by Expedia Affiliate Network (EAN) reveals the following interesting pointers:

  • 48% book hotels in airlines websites
  • 90% showed interested to book hotels in airlines websites if they find it convenient / compelling
  • Three most add-on features consumers would like to see when booking their hotel:
    • 60% – Package offers and special deals
    • 37% – User reviews on local hotels
    • 36% – Relevant hotels for their trip
  • Top three consumer frustrations when booking any aspect of their travel through an airline website:
    • 51% – Hidden costs
    • 33% – Unclear pricing
    • 25% – Limited options

So, its evident that travellers are beginning to reserve their accommodation in airline websites. Airline market is also responding pretty fast to this changing consumer behaviour.

Majority of the airlines partner with a third party company to provide ancillary / non-air services on their website. This partnership strategy makes sense (for time being).

For example, KLM Airline’s hotel section is powered by iseatz.com, Ryanairhotels.com is powered by HotelsCombined.com, hotel section in United Airlines and Jet Airways is powered by travelnow.com (Expedia affiliate partner network), hotel section in Webjet and EasyJet is powered by ivictor,  a product of intuitivesystems.com.

Overall summary: OTAs have a serious competitor for their hotel services (in addition to flights). What are the various steps that OTAs are going to take to differentiate themselves from an airline website that also offers a ‘one-stop-shop’ solution?

Author: Karthick Prabu

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4 Responses to Do Travellers Book Hotel From An Airline Website? Answer is a strong YES

  1. Anonymous says:
    3 December, 2012 at 12:38 pm

    Nice to see British Airways featured in this – as unlike many of the Airlines (who simply utilise an Expedia Affiliate site to offer these products) they do actually have their own Holidays subsidiary that manages the whole Dynamic Packaging process.

    Reply
  2. Anonymous says:
    3 December, 2012 at 3:07 pm

    Almost all airline website hotel inventories are powered and sourced from OTA inventories through white-label agreements. The airlines in most cases maintain sourcing inventory for their own “vacations” sites (see airfare plus hotel stay, etc), but for the rest of the purchases, the Airline receives a portion of the OTA commission.

    While growth of these transactions will erode the commission % received by the OTA if these customers who would buy OTA direct are now buying from airlinesite.com, the major win for airlines is controlling the audience and decreasing leakage to competitor sites.

    Airlines have a powerful advantage over OTAs in that they can offer miles bonuses for booking hotel rooms on their website. This is a powerful statement for folks trying to accumulate air miles and an offer nobody can match at the same cost.

    Reply