There are many different ways to book travel. You can book with a travel agent, you can book yourself directly with the airline or hotel, or you can book with an OTA. First off, let’s dig into what an OTA even is.
What is an OTA?
Online travel agencies, or OTAs, are pretty much what they sound like: websites that allow you to book flights, hotels, rental cars, activities and / or vacation packages. If you’ve ever used Expedia, Orbitz, Travelocity, Hotels.com, or Hotwire, for example, you’ve used an “OTA (Fun fact: All five of those are owned by the same company.)” Bank websites that let you use your credit card rewards points to book travel (like Chase’s UltimateRewards.com or Citi’s ThankYou.com) are also OTAs.
Why Do People Use OTAs?
People use OTAs for a variety of reasons. Here are a few of the most popular reasons that OTAs are used.
- Some OTAs have rewards programs that earn you a percentage of your purchase back in points that can be used for future travel and many also partner with cashback websites, allowing you to earn additional rewards. For example, Hotels.com has a rewards program that offers you one night “free” after staying for ten nights. It’s actually not a completely free night, “but rather” 10% of the average cost of the ten nights that you stayed.
- At times, OTAs will offer prices that can’t be found elsewhere, especially for special hotel rates (like those including breakfast), travel packages or “mistake” fares. Mistake fares are when an airline or OTA offers a flight for a huge discount accidentally.
- OTAs may offer more generous cancellation policies – for example, Priceline allows you to change or cancel a plane ticket without penalty until the end of the next business day after booking, while US airlines only allow this within 24 hours of booking (and foreign airlines may not allow free changes or cancellations at all for flights that aren’t subject to US regulations).
- Some travelers may not have a choice of where to book their flights, for example, if you’re booking with credit card rewards points you will be tied to that booking portal in some cases.
- OTAs also can make it much easier to compare different rates. If you want to see how much it costs to fly from Denver to Chicago, it would take a lot of time to go to each airline’s site individually. With an OTA, you can quickly compare most of your options.
When Is It Better to Book Directly?
Even though OTAs offer quite a few benefits, you might not always want to book through one. Sometimes it makes more sense to book directly with the airline or hotel. Here’s when you should consider booking directly.
- If you think you might need to make changes to your itinerary. Earlier this year, the New York Times reported on the tragic story of a woman who lost the opportunity to see her mother one last time because the OTA her ticket was booked through canceled her reservation after being notified of a last-minute ticket change made through the airline. While this kind of experience is rare, often booking through an OTA forces you to make any changes through the OTA, which has fewer customer service agents and less power to make exceptions than an airline reservations department.
- If you are staying at a chain hotel and want to earn points or enjoy elite member benefits. Since hotels have to pay commissions to OTAs for reservations booked through them, most major hotel chains like Marriott / Starwood, Hilton and IHG only award hotel rewards points for bookings made directly through their website, and will also only honor elite benefits like upgrades, free parking or lounge access on direct bookings. Some chains (like Starwood) also only offer free WiFi to loyalty program members on direct bookings and will charge you full price for internet access if you book through a third party.
- If you have a corporate discount or other special rate. Large companies and other institutions often have negotiated rates with hotels or hotel chains, and it’s very common for hotels to offer special rates for AAA members and government employees. Some credit cards may also offer special rates – for example, the Fine Hotels & Resorts Program offered to American Express Platinum and Centurion cardholders. In addition to lower prices, these negotiated rates often have extra benefits and more generous cancelation policies than the standard advance purchase rates offered online and through OTAs. These types of discounts are typically only available when booking directly with the hotel, or through a live human travel agency or corporate booking portal.
- If you found a lower price elsewhere. This seems counterintuitive, but many hotel chains have some version of a “best price guarantee” that says if you find a lower price for the same room on another website, they’ll match it and give you some kind of additional compensation – an extra discount, bonus rewards points or even a complimentary night. As you might expect, these guarantees are full of restrictions and the biggest being that the lower price has to have the exact same terms as the price available on the hotel website, including room type, cancelation policies and sometimes even deposit requirements. While they have become less and less generous over the years, it’s still possible to find excellent value in some cases.
OTAs play an important role in modern travel, and there are certainly times when booking through one is the best option. However, there can also be a lot of downsides, especially when it comes to making changes or enjoying elite status. So make sure you’ve got the full picture before choosing where to book your next trip.