Value of Online Travel Agencies for Hotel Bookings Diminishing

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For a long time, the biggest incentive of booking hotels directly (via hotel's website or phone number) instead of using online travel agencies (OTA) was to ensure you would be able to earn points and night/stay credits with the corresponding hotel rewards program for your stay; something you are generally not able to do when booking via a third-party.

If you're not particularly interested in earning points for hotel stays, this provided little incentive to book directly with the hotels. Then, last year, most of the major hotel companies began to offer free internet access to customers who booked directly and were members of their rewards program. That likely provided more incentive to book directly with hotels, but it is a recent development by most major hotel companies that have made booking directly with hotels a real motivator.

Over Water Bungalow

To further incentivize customers to book directly, steering them from booking via OTAs, most major hotel companies have begun to offer member rates or discounts to those members of their rewards programs that book their stays directly. According to this Wall Street Journal article, actual discounts vary by company and dates and can range from 2% to 30%. You do not even have to be a current member to see these discounted rates; by just signing up for the rewards program when completing your reservation you will be able to book a member rate.

Interestingly enough, per the WSJ article, hotels are contractually prohibited from offering public rates lower than what OTAs offer. However, one way around this is by providing member rates or discounts as those are not technically considered publicly available rates. OTAs have responded by pushing hotels offering member rates or discounts lower down their search results page.

There is clearly an interesting battle going on between hotels and OTAs. Not sure who is going to win in the end, but we have noticed member discounts and rates on the vast majority of bookings we've looked at over the last few months. The savings are real, and, at least when booking a chain hotel, doing so via an OTA may hold little to no value even if you are not interested in earning points in a particular loyalty program.

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