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What is an online travel agency and how do they work?

what is an online travel agency and how do they work

With the ability to purchase and order so many things online, why should travel be any different? Looking at the travel landscape, it’s becoming clear that online is the way to go – and hence we’re seeing a marked rise in online travel agencies (OTAs).

If you’ve got a passion for travel, then perhaps working within this industry has piqued your interest? Below, you’ll discover exactly what is an OTA; the various business models you can choose from; how it works; and how to become a travel agent with an online presence with your own successful franchise business. Let’s get started..

What is an online travel agency?

The very first question we are going to answer is what is an online travel agency? In short, an online travel agency (or OTA) is a travel agent who offers travel products and services online, through a website or app, to prospective customers, who can then choose between different properties and accommodation, flights and modes of transportation, rental cars, activities and events, insurance and more.

These can come in the form of individualised itineraries for the end customer or they can be packaged deals that the online travel agent has prepared beforehand by liaising with tour operators and other travel package providers. Often, such travel agents start an online travel business to help their customers find an easier, faster and more convenient way to travel — be it for leisure, business, a honeymoon, cruise or anything else.

The overall rewards for customers are immense. Add to that the fact that online travel agencies have a built-in booking system that allows instant bookings, travellers can have access to a broad range of information that they need before their trip, and can book their next trip online, easily and at their fingertips.

OTA business model

If you are curious about how an OTA earns its income, we now turn to the OTA business model, which is accompanied by an online travel agency business plan. There are two primary business models that are followed across the industry. These are the merchant and the agency model. 

With the merchant model, say that the merchant is a hotel offering accommodation to travellers. This hotel has a listing on the OTA’s website. When a customer chooses to book a room at this hotel, they will make the booking through the OTA. They will then arrive at the hotel and pay the person responsible. Once the hotel has received its payment from the customer, they will pay the OTA a cut from the total fee for bringing the customer to them.

As for the agency model, the situation is somewhat reversed. Let’s use the example of the same hotel above. When a customer finds the OTA’s website and locates the hotel’s listing where they want to book, they will make a payment directly through the OTA’s website. It is then the OTA’s responsibility to pay the hotel a commission or a percentage of the fees received for bringing a customer to them. 

There is one additional aspect of the OTA business model to consider. This is the advertising model. Through this model, a travel related vendor, such as a hotel, can advertise their products on meta search engines on a cost-per-click (CPC) or cost-per-acquisition basis (CPA), which is paid to the search engine.

To leverage the power of paid advertising, it’s necessary for travel vendors, such as hotels, to carefully weigh up their options against their predetermined budget and establish if the costs outweigh the benefits or vice versa. This may be a more feasible option for larger companies than for a small OTA.

How an online travel agency works

Now, let’s explore the intricate details of how an online travel agency works.

In many cases across the travel industry, OTAs will require a tour operator to apply to be a vendor on their site. However, there are other cases where an operator simply creates an account and is automatically approved.

After this process is completed, the OTA will create a listing on their site or help the operator create their own listing based on a series of questions and factors/criteria that customers look for. When a listing is finalised, it will go live on the OTA’s website. The benefits of this for tour operators are immense because they can reach a much wider audience.

On the consumer-facing side of the equation, customers visit the OTA’s website and browse through their offerings. They can choose from custom-made itineraries or book a ready-made travel package.

They will then be prompted to provide their contact information on the OTA’s website and these details remain there, without giving the operator access. And this, in a nutshell, is how an online travel agency works.

Although we already mentioned a few of the benefits of online travel services above, there are additional ones worth considering. These include: 

  • Certain OTAs offer reward programmes
  • OTAs can offer customers special and discounted rates
  • Some OTAs have generous cancellation policies
  • Today, many users don’t know where to book other than an OTA
  • OTAs make it easy to compare different rates

Want to become a travel agent?

With so many good reasons to get started in the industry, you may want to become a travel agent. One of the best and fastest routes to success is to set up a travel agency franchise.

Wondering where to get started? The Travel Franchise offers amazing opportunities for you to become a travel agency franchise. With The Travel Franchise, you can take advantage of all the benefits that come with its package of options. For example,

  • You don’t need prior experience in the industry and can work from home
  • You can start part-time and work your way to a full-time role, if you choose
  • Enjoy some of the industry-leading commissions, spanning from 60% and higher, depending on the package you choose
  • Receive exceptional training and mentorship

With The Travel Franchise, you’ll be given a customisable website that instantly gives you that all-important online presence. Unlike an OTA, customers will not be able to book all aspects of their holiday via your website. But they will get an idea of the depth and breadth of your offering. Your website is more like a shop window.

Your key point of difference is the personalised customer service you’ll be offering. Unlike an OTA, your customers will be encouraged to interact with you. You’ll build a rapport and a close relationship whereby you’ll know the best products to pick and choose for them to create their dream holiday.

While an OTA has its obvious benefits, more holidaymakers are appreciating the personalised attention that comes with having a personal travel consultant. Very often, when booking a holiday via an OTA the customer can feel hugely overwhelmed with the vast choice on offer.

On average a consumer in search of a holiday package will trawl the internet for over eight hours, visiting 38 websites. And even once they’ve made their booking, they still don’t really know what they’ve booked.

As a travel consultant with The Travel Franchise, you’ll be taking all the stress and strain out of the booking process. Your website will be a source of inspiration for your clients, highlighting special offers, great deals, tailor made itineraries and personalised blogs – all of which are uploaded for you, leaving you free to build those essential client relationships.

If you want to become a travel agent, The Travel Franchise is the ultimate choice for you. Discover all the affordable ways to get started, including exploring the Lite, Elite and Entrepreneur package options. What is more, you can spread the cost of your business with various payment plans available and then spread your wings to enjoy a truly fulfilling and rewarding role in running your own business.

Conclusion

Becoming a travel agent with The Travel Franchise is one of the best ways to achieve that work-life balance you’ve been searching for.

This online travel business opportunity enables you to focus on your family commitments and start part-time from the comfort of your own home. With exceptionally low overheads, low entry into business and amazing training and support, this truly is the chance of a lifetime that’s not to be missed.

Discover more about The Travel Franchise and its opportunities for personal and business growth today.

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