Online travel agencies (OTAs) like Expedia, Kayak, and Hotels.com have become incredibly popular in the travel industry. These platforms offer user-friendly websites, competitive prices, and the ability to compare multiple flight, hotel, and rental car options in one place. Most people have likely used an OTA to make a reservation at some point. However, there is a significant difference between booking a flight and reserving a hotel room through an OTA.
When you book flights through these third-party sites, you usually earn points or miles with the airline loyalty program. But when you book a hotel through an OTA, you typically won’t earn points or enjoy elite perks with the hotel loyalty program. Many travelers have discovered this the hard way, booking a hotel from a chain like Marriott or Hilton through an OTA, only to find out upon arrival that they cannot earn points or use their elite status benefits.
So, why don’t you earn hotel points when booking through an OTA? To answer this question, I consulted Henry Harteveldt, a travel industry analyst and president of Atmosphere Research Group. He provided insights into the history of OTAs, their relationship with hotels, and the reasons behind the lack of point accrual when booking a hotel stay through them.
OTAs originated from the need to improve the efficiency of flight reservations in the late 1950s. As air travel became more popular, the existing card-based booking systems became inadequate to handle the increased number of passengers and routes. In 1961, American Airlines collaborated with IBM to develop a groundbreaking software called SABRE, which revolutionized the booking process by automating flight reservations. This technology significantly improved the efficiency and speed of travel bookings.
In the following years, other airlines developed their own computer reservations systems, allowing travel agents to book flights directly from their computers. These computer reservations systems became the foundation for OTAs, with SABRE launching the first OTA called Travelocity in 1996. Microsoft introduced Expedia later that year, and investments from major airlines led to the creation of Hotwire in 2000. In 2005, Hotwire, Hotels.com, and Tripadvisor merged with Expedia.
OTAs, like traditional travel agencies, earn a commission from travel bookings. Flights generally offer low or no commission, but the large volume of flight reservations provides significant revenue potential for OTAs. For hotels, commission rates are often higher, ranging from 5% to 25%. This means an OTA could earn a substantial amount for a customer’s hotel reservation. Additionally, OTAs enable customers to make travel arrangements online for various properties, reducing labor costs and allowing quick room bookings.
To combat the rise of third-party bookings through OTAs, hotels had to get creative. They gradually reduced OTA commissions and introduced exclusive member rates and perks to incentivize travelers to book directly. Marketing campaigns were launched to promote the benefits of direct bookings, and hotel loyalty programs stopped awarding points for bookings made through OTAs. Points and elite perks have a cost, and they are often less expensive to award than paying a large commission to an OTA. Therefore, hotels choose not to offer these benefits when bookings are made through OTAs.
Despite not earning hotel points or elite status benefits, there are still reasons why you might consider booking your next stay through an OTA. Some OTAs have rewards programs that allow you to earn reward nights, points, and sometimes even perks similar to elite status benefits for stays at listed properties. Certain online travel agency loyalty programs also provide benefits for booking vacation rentals, flights, rental cars, and more. If you aren’t loyal to any particular hotel program, focusing on an OTA rewards program can be advantageous.
Additionally, when you book through an OTA or directly with a hotel, you’ll still earn points and miles through the credit card you use to pay for the reservation. You can further enhance these earnings by booking through a credit card travel portal, which functions similarly to an OTA. It’s important to compare nightly rates and the benefits you’ll receive before deciding whether to book a hotel room through an OTA or directly.
In conclusion, OTAs have transformed the travel industry and made online booking incredibly convenient. However, hotels incur costs when bookings are made through these platforms, which is why they choose not to offer hotel points or elite perks for stays booked through OTAs. It’s essential to consider the value of the points and benefits offered by hotel loyalty programs when deciding whether to book through an OTA or directly.