The Battle of Booking: OTAs vs Traditional Travel Agents

Two and a half decades ago, the founders of Hotels.com came up with the idea to start using a toll-free phone number as a travel booking system. Little did they know that their idea would turn into a multibillion-dollar market. The proliferation of commercial internet helped morph their business into the world’s first online travel agency. 

The rest, as they say, is history. Since then, OTAs have fully transformed the hospitality industry and forced traditional travel agents to rethink their business. Today, we’ll take a closer look at their ongoing rivalry in both leisure and corporate travel sectors and try to answer a burning question: Which is better, OTAs or traditional agents?

Understanding OTAs and Traditional Travel Agents

Online travel agencies (OTAs) are websites where travelers can research, compare, and book accommodation, buy airplane tickets, rent a car, reserve a dinner table, and more. Hoteliers and other industry providers are welcome to list their products and services with OTAs for free, but they pay a commission fee for each booking. 

Unlike global distribution systems (GDS) and metasearch engines, OTAs are not solely inventory aggregators. They are better defined as distribution channels that provide marketing services and tools for hosts and facilitate the booking process on their behalf. You can think of OTAs as search engines with a “Book” button. 

OTAs like Booking.com, Airbnb, and Expedia are huge industry disruptors that have already changed how people approach travel planning and booking. By allowing travelers to find and book affordable accommodation in only a few clicks, these sites reduce the need for agents in favor of fast and frictionless self-service. 

Traditional travel agents are industry professionals who use their skills, connections, and experience to make personalized travel arrangements for their clients. Many travel agents specialize in niche markets to ensure premium service and unrestricted access to destinations and attractions that are unavailable to the general public. 

The majority of modern-day travel agents work as advisors to leisure travelers or as corporate travel agents for travel management companies (TMCs). Like OTAs, travel agents take a commission from vendors when selling their vacation packages and cruises and booking airline tickets, cars, and hotels for business travelers.  

Many travel agents now charge consultation and service fees to offset commission cuts. This results in higher prices for travelers, which is another reason people are turning to OTAs. Traditional travel agents are still highly regarded by business and luxury travelers who prefer personalized service and in-person booking options.

Comparison of Services

Now that you have a better idea of their respective roles and places in the industry, let’s compare OTAs and travel agents based on the services they provide. 

Pros and Cons of Using OTAs

What makes online travel agencies a popular choice for hotels, airlines, and car rentals, and what are the drawbacks that travel providers are willing to overlook?

Pros

Cost-effectiveness and wider reach

Compared to what traditional travel agents offer, both flights and accommodation are cheaper when you book through an OTA. Even though online travel agencies often add significant markups on luggage and special amenities, the average cost of travel is still lower than agent prices—especially for direct flights and standard rooms.

OTAs are more cost-effective for many airlines and hoteliers, as well. The standard OTA commission rate is 15% per booking, which is about the same amount that hotels pay to travel agents. However, OTAs generally provide more value for money because they have a larger customer pool and broader reach than traditional travel agents. 

Ability to compare multiple options quickly

One of the best advantages OTAs have is streamlined access to a variety of options. On average, traditional travel agents work with around 10-20 vendors, depending on the size and specialization of the travel agency. OTAs literally offer millions of listings that travelers can research and compare before choosing the best option. 

Cons

Lack of personalized service

OTAs’ main advantage is also their biggest flaw. Ultimately, booking sites put your travel arrangements in the hands of an algorithm. The best algorithm can do to accommodate travelers’ unique interests and specific requirements is personalized search. Even then, travelers must research options and hunt for the best deals themselves. 

Issues with customer support and handling of travel disruptions

Unlike traditional travel agents, OTAs don’t make sure rose petals and champagne await you in your honeymoon suite. But even more importantly, they can’t change your flight at the eleventh hour or send a limo to pick you up when you’re late for a business meeting. OTAs’ lack of hands-on support will leave you stranded in a foreign place.   

Pros and Cons of Using Traditional Travel Agents

Traditional travel agents are as old as the travel industry, so they must offer something that nobody else can. Here are the pros and cons of using travel agents.

Pros

Personalized, expert advice and support

Traditional travel agents prevail against all odds because they are human. They use their industry knowledge and experience to accommodate all their clients’ needs, regardless of how unique and specific. Good travel agents go above and beyond to provide expert advice, help, and support to travelers, from one human being to another.

Besides, almost 90% of travelers actively seek personalized journeys. “Custom-tailored,” “unique,” and “authentic” are not only marketing buzzwords. Personalization gives flair to travel experiences. It is a secret ingredient that can turn a tourist trap into a lifetime memory and a priceless add-on that most travelers are happy to pay for.

Better handling of complex travel arrangements

For the same reasons we discussed above, traditional travel agents are much better at handling complex travel arrangements. Using valuable industry connections, they can custom-tailor multi-destination packages, coordinate transit flights, and orchestrate last-minute hotel transfers. These skills are essential in corporate travel. 

Cons

Typically higher costs

Personalization and specialized services allow traditional travel agents to compete with OTAs, as they offer more value to travelers. It’s only fair that traditional agents charge extra for services that online travel agencies can’t provide. Unfortunately, higher prices make their services inaccessible to travelers with limited budgets. 

Limited comparison options

Even though traditional travel agents use global distribution systems (GDS) to access up-to-date information on the availability and pricing of flights, hotels, and car rentals worldwide, they don’t recommend travel providers unless they pay them commissions. On average, agents work with 10-20 vendors in select destinations. 

Impact on Business Travel

The difference between online travel agencies and traditional travel agents is nowhere as obvious as in corporate travel. Why? Corporate travel presents a huge challenge for businesses and travel agents alike because of the logistical and administrative work involved. These trips can be very expensive and difficult to organize.  

Consequently, this is where traditional travel agents outshine OTAs. They have the right skill set and connections needed to coordinate complex trips, even when the itinerary includes large groups of individuals across multiple flights and destinations. Businesses rely on travel agents to keep these trips on budget and on schedule. 

Employing the self-service approach to business trip planning could easily turn into a logistical nightmare. While it may seem that OTA bookings could save companies a lot of money on travel, this could not be further from the truth. OTAs don’t offer discounts and perks that travel agents who specialize in corporate trips do. 

The reliability and peace of mind that travel agents can offer to corporate travelers go beyond money savings. Hands-on travel agents are priceless company assets. Their industry relationships and experience can save business deals and help companies in crises by switching flight tickets and booking trips at the last minute.

Not to mention, making travel arrangements takes a lot of time that professionals don’t have. The only scenario where booking a business trip through an OTA makes more sense than paying a travel agent is for simple, routine trips, such as taking an hour-long flight to a business meeting and needing a single room for the night.

Future Trends in Travel Booking

OTAs simplify booking at no extra cost, and travelers love that. With convenience being their key bargaining chip, they have everything they need to dominate the market until an easier, faster, and more affordable alternative comes along. At the moment, OTA’s gross bookings exceed $150 billion, and OTA market share for 2024 is 22%. 

Judging by current consumer behavior and industry trends, OTAs’ impact on travel won’t diminish anytime soon. On the contrary, major online travel agencies like Booking.com are making their services even more attractive to the consumer by incorporating AI and machine learning, which helps them personalize recommendations. 

Does this mean that traditional travel agents will go extinct? Not at all! The human touch is crucial for the travel experience. Corporate travel agents already outperform OTAs, but leisure travel agents keep themselves busy, too. They feel right at home in niche destinations while providing personalized, authentic, and luxury experiences. 

In fact, travel agencies are predicted to increase their market share by five points to 26% before 2026. The same predictions announce a slight downfall for OTAs as their market share shrinks by one point to 21%. The only real losers in this race are hotels, which are set to expect fewer direct bookings and increased net revenue loss.

Conclusion

Between OTAs and traditional agents, today’s travel businesses seem to be blessed with options. There are pros and cons of choosing one over the other, no matter which way you decide to go. With OTAs, accommodation and travel service providers get a wider reach, while agents give them premium clients and repeat bookings. 

From the traveler’s standpoint, some of the greatest benefits of choosing OTAs over travel agents are speed, convenience, and the ability to compare options and prices. On the other hand, traditional travel agents offer personalized service, curated trips, and hands-on support, but they are typically more expensive than OTAs. 

Which option is better for your business? Ultimately, that depends on your market and target audience. If you cater to budget travelers and want to increase your online presence, you should try OTAs. Luxury hotels, corporate accommodation providers, and businesses looking to build guest loyalty are better off with agents. 

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