The online travel agency business over the last couple of decades has largely been built around selling hotel stays. But in 2019, there will undoubtedly be an acceleration of the drive to diversify their core businesses not only into apartments and vacation rentals, but also into tours and activities, restaurants, food delivery, and ridesharing.
The online travel agency future is wide open. Booking and Expedia account for 79% of the combined revenue of the top OTA as they continue to build up their non-traditional inventory to compete against the likes of Airbnb.
While the businesses started with hotels there is now diversification of online travel agency business lines. TripAdvisor, for example, has been a leader in the march away from hotels, while it's still its main business at 73 percent of revenue, in the same period, TripAdvisor’s revenue from its non-hotel segment — experiences, restaurants, and home rentals — jumped 80.8 percent compared with the year-earlier period*.
For TripAdvisor, it was experiences and restaurants that drove the boost in its non-hotel business. Visitors who are on a leisure trip are spending a comparable amount on food and activities as they do in the hotel. Therefore, that’s a really big spend pie that online travel agencies want to help consumers with.
Unlike TripAdvisor, Booking Holdings doesn’t break out its revenue according to business lines, but undoubtedly makes the vast majority of its money on hotels. While the company, which owns brands from Booking.com and Kayak to OpenTable and Agoda, sold 1.8 million airline tickets and booked 19 million rental car days in the third quarter, it is branching out through investments in China and Southeast Asia and via its own business operations into tours and activities, ridesharing, and food delivery.
Booking Holdings (owners of Booking.com, Kayak, OpenTable and Agoda) and TripAdvisor both acquired tours and activities software-connectivity companies in 2018 to further expand in the sector.
“In the area of experiences, we are building out our product capabilities, creating a seamless integrated way to offer more choices for our accommodation customers,” said Glenn Fogel, the Booking Holdings CEO.
Booking Holdings’ step into tours and activities is clearly not as advanced yet as TripAdvisor’s, but it shows how all the major players are branching out beyond hotels, and looking to capture travelers through the entire trip.
“Booking.com’s experiences product is scaling well, and we now offer experiences in approximately 70 cities worldwide,” Fogel said.
“In addition, we are making progress with experience in other areas such as offering at-hotel services and restaurant booking options.”
As the online hotel booking business gets more competitive, with big chains pushing direct bookings, Google getting into the fray, and Airbnb throwing its weight around, you can look for online travel agencies to continue to point their businesses beyond hotels.
This article is sourced from Skift.com*, who have released a recent report on Travel Megatrends 2019, if you would like to read this report, click here.
*source Skift.com - Not associated with Tourism Central Coast, Skift, is a US travel research and intelligence company that focuses on documenting and helping the travel industry understand the changing traveller behavior.