The Ups And Downs Of Online Travel Agents

I frequently get asked questions about Online Travel Agents (OTAs). These are travel agents such as Expedia, Travelocity, Priceline, etc. that operate exclusively on the internet. As such, they have become popular options for customers looking to get all of their choices on one page without searching a bunch of sites. In fact, consolidator sites have become so popular that now there are consolidator of consolidator sites (Sites that will search all the OTAs for you.)!  While the OTAs have a reputation for offering discounts, that is not always the case.

Note: Expedia is buying up many of its rivals and although they are leaving their programs independent of each other for now, that may not always be the case. It is the OTA that I will generally reference, although most of them are very similar.

Why Use an OTA?

There are a couple of reasons that people use an OTA.

Ease of Use

The first is simplicity. If you are traveling from A to B and need a hotel and rental car, you can see every option without searching each airline, hotel and rental car site independently. You can search for packages, just a hotel, a flight and car, etc. with a single click.

Get it all at one site

Get it all at one site

 

You can compare times, prices and even some of the fees as well as search based on the criteria that are important to you.

Compare the Big 3 in one spot

Compare the Big 3 in one spot

 

Hotels will be sorted by amenities, price, location, etc. If you want a bed & breakfast in Brooklyn that offers rooms with hair dryers, you can isolate those criteria.

In this sense, OTAs are a major time-saver.

Rewards Programs

Every major OTA has its own rewards program. Booking through an OTA can get you up to quadruple rewards: You can get cash back for accessing it through an online shopping portal, rewards from the OTA, rewards from your credit card and, potentially, rewards from the travel provider.

About Online Shopping Portals (OSP)

I’ve discussed OSPs in-depth before (the original post is a bit dated, but it still works), but the concept is very simple: It’s a third-party site that directs you to your retailer. The retailer gives the site a commission, which it then shares with you. Think of it this way: If you go to your normal shopping mall and head straight for The Gap, you get no discount. But if you stop at the information desk first, you get 3% back. Never, ever buy anything online without checking at an OSP first. It will route you to exactly the same website that you would have accessed directly. It just gives you money for doing so. You should clear your cookies/cache immediately before accessing the sites.

There are a number of OSPs you can use, but the two that I prefer are Mr. Rebates (first choice) and BeFrugal (a close second).* Both pay reward levels that are at/near the top of the industry but, more importantly, provide good customer service and track rebates well. Both will give you a couple of dollars back per airline ticket, as well as 3-4% for rental cars and hotels.

As for the Expedia Rewards program itself, it’s not particularly good (but it’s at least something). Here’s the breakdown for earning points:
Screen Shot 2016-05-02 at 5.01.47 PM

Redemptions are confusing. There’s nothing on their website to indicate the value you get per point and, in fact, I had to talk to five different people to get the breakdown. It is, as follows:

  • For hotels and package deals, you get $1 for every 140 points (e.g., A $100 hotel room would cost you 14,000 points.). Certain partner hotels have a rate of $1 per 70 points. If you do not have enough points in your account, you can pay for the difference out of pocket.
  • For flights, you receiver $1 in value for 160 points. You must, however, have the total number of points that you need available.

Expedia has joined the travel providers in offering elite status, based on how much you spend. There’s little that’s particularly useful, outside of some minor bonus points, but it’s better than nothing.

Screen Shot 2016-05-02 at 5.00.48 PM

Why Not To Use OTAs

While OTAs are very useful for searching, I usually advise people to look for travel on OTAs, but don’t make them your only source, and you probably don’t want to book there. Here’s why:

Horrible Service

We’ve all heard horror stories of dealing with travel providers, but the OTAs are worse than most. Queues are often long and you frequently get incorrect information. (My call earlier not only took me to five representatives but also got me several incorrect responses.). The representative on the other end of the phone is empowered to do the basics, but nothing else. And since you’re dealing with an intermediary agent, not the travel provider, you can’t just call the hotel or airline to make changes. You need to go through Expedia.

By the way, when you make a hotel reservation through an OTA, the hotel only gets a small portion of the revenue. If they have to put somebody on the ground floor between the boiler room and the elevator, guess which customer the front desk is going to choose? And do you want your elite benefits or hotel points? Good luck, since many hotels won’t give you either if you book through an OTA. Here’s an interesting article about what the hotels do with third-party bookings.

OTAs Are Picky (And Not in Your Favor)

Looking for a discount carrier? Don’t count on finding all your flights, since Southwest generally shuns OTAs.

How about hotels? You’ll certainly get a wide selection, but be aware that sites may push hotels that pay them more or offer other incentives to the OTA. Be sure to read past the first choice that they show you.

My advice for both is to search on an OTA, but book directly at the provider’s site. Hotels offer further carrots and sticks. If you find a cheaper price elsewhere, the hotel will usually match it and give you something on top. If you book somewhere else, though, don’t plan on getting points or elite benefits.

Reward Programs

You may miss out on the OTAs proprietary programs, but you’re generally not getting a lot from those, anyway. And if you’re booking a hotel, the points from the hotel are certainly worth more than those from a third-party agent like Expedia. As for the online shopping portals, many hotels, airlines and rental car companies also offer their product through OSPs. You should still be able to get your cash back.

The Bottom Line

OTAs are a good source of information and provide one-stop viewing for most of your travel needs. But there are clearly disadvantages to actually booking through them, so be careful where you purchase your product.

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