The Demise of the OTAs?

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The Demise of the OTAs?

The parent company for Booking.com today announced a fall in profits in the previous quarter. Booking Holdings tumbled the most in nine months after the OTA said third-quarter earnings would be well below analysts’ estimates.

Booking’s total revenues for the second quarter were $3.5 billion as compared to gross profit of $3.0 billion, a 20% increase from the prior year (approximately 16% on a constant-currency basis). Net income in the 2nd quarter was $977.4 million, a 36% increase year on year. Net income was $20.13 per diluted share, a 40% increase as compared to the prior year. The group has been working to increase visibility in North America, a market traditionally dominated by Expedia.

The announcement comes in the same week that The Association of Turkish Travel Agencies (TÜRSAB), which has paved the way for blocking Booking.com in Turkey, has decided to take legal action against 20 other online reservation and travel portals. Platforms such as Airbnb, Agoda, Skyscanner and Expedia, which TÜRSAB believe have been in unfair competition with the Turkish travel agencies and tour operators by not paying any tax, although they earn income selling Turkish product and services to Turkish customers in the Turkish market.

Booking.com’s website and app has been suspended in Turkey since March 2017 following a court ruling citing accusations of unfair competition in the lawsuit filed by the TÜRSAB.

Trivago recently declared a 21% decline in second-quarter revenues as it cut back on advertising to focus on profitability. The Expedia-owned metasearch site reported a net loss of $20.7 million for the quarter, compared to a loss of $3.4 million in the same period last year. Half-year figures show a cumulative net loss to 30 June of €42.5 million, compared to net income of €4.3 million for the same period in 2017.

Trivago isn’t the only Metasearch platform to be hit. TripAdvisor, previously owned by Expedia Inc. also announced it would be cutting back on advertising spend after the company saw (for the first time ever) a decline year-over-year in the number of average monthly unique hotel shoppers.

All this comes just a few weeks after the UK’s Competition and Markets Authority (CMA) launched enforcement action against a number of hotel booking sites that it believes may be flouting consumer protection legislation by making misleading claims about discounts. The CMA had widespread concerns about hotel comparison and booking websites after a six-month investigation which found that customers were being routinely misled.

The CMA, who launched its investigation into online booking sites in October 2017, has sent warning letters to a number of sites demanding they review their practices following widespread concern surrounding; ambiguous search results, misleading discount claims, hidden charges and pressure selling.

Our CEO and direct booking advocate Frank Reeves believes this uncertainty in the OTA market will help further shift confidence to the direct channel for consumers and hoteliers alike.

“It remains essential in my view that OTAs should be used strategically while at the same time hoteliers focus on growing direct bookings and minimising associated costs. I believe most hoteliers feel the same. Avvio hotel customers consistently strive to provide the best possible experience for their guests, and time and again it has been proven that this is achieved when the guest books direct.” tweet

By |2018-08-10T13:28:25+00:00August 10th, 2018|Booking Engine, News, OTA|