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The purpose of this article is provide some insight into how the Online Travel Agents operate, to help TA members understand what they are dealing with before attempting to use their services.
Millions of travellers use Online Travel Agents, for hotel or holiday bookings without understanding what these businesses really are. For many, their experiences are fine, meeting their reservation and travel expectations and needs. However, too many travellers end up with some form of issue with the online travel agent in regard to their bookings, as evidenced by the endless stream of negative experiences shared on the various TripAdvisor forums.
Hotel Reservations - Booking Online
Online Travel Agents are often, and commonly referred to as 'booking sites' . Originally, online travel agents specialized solely in hotel reservations, but over the recent years have added flights and other land content to increase their appeal. They are effectively the online version of a traditional travel agent - without a shop, readily accessible and on the surface. They all appear the same. However, a more detailed look will highlight the various forms, which may very well be the difference between a seamlessly planned holiday and a mishap you'd rather forget.
One of the most common uses of an online travel agent, is for the booking of a hotel. In this piece, the focus will be on the various types of agencies, how they operate, and point out some of the advantages and disadvantages.
1. Direct Contract Pre-Paid Sites
These agencies as stated, require you to make payments in full, at the time of the reservation. These agencies hold your funds, and do not forward this, until your stay has been honoured. They also now have an 'escrow' system, whereby the funds are held in an account, which generates a Virtual Credit Card. These one time use Virtual Credit Cards, cannot be activated by the hotel, until the date of guest check-out. As these Virtual Credit Cards are endorsed by the credit card institutions (Visa, MasterCard etc), they offer the same consumer protection rights, and if any issues were to arise, a Charge-Back can be enforced against the hotel.
In the travel industry, they are referred to as 'Charge Back' or 'City Ledger' reservations, and these agencies have direct contracts with the hotels, that provide their available inventory on their site. (Examples of such sites - Expedia, Agoda, Wotif)
Whilst having to pay upfront may not suit all consumers, there are several distinct advantages to this type of reservation.
2. Direct Contract Hotel Determined Payment Sites
These agencies also have direct contracts with the hotels, however the agencies themselves typically take no payment from the consumer (although they *can* also advertise pre-paid rates - which must be clearly indicated - but the difference here, is that the payment is processed by the hotel, not the agent). The payment method is determined entirely by the hotel, and can vary greatly according to their policies, not of the agent. This can range from full pre-payment, part payment, one night deposit, to a simple pre-authorisation several days prior to your arrival. Some smaller hotels take no payment at all, and use an honour based system on the fact that a credit card number has been provided.
These types of agents, are generally considered to be the safest in the travel and accommodation industry. (Examples of such sites - Booking.com, Hotels.com, Expedia)
There are both advantages and disadvantages to this type of reservation;
3. Meta-Search Comparison Sites
Often referred to as 'aggregate' or 'consolidator', these sites have become very popular over the recent years. Unfortunately, they market to consumers who do not wish to do their own homework, and can be riddled with pitfalls. They do not have direct contracts with the hotels, and their businesses rely solely on diverting bookings to other online travel agents, and receiving 'referral' commissions. (Examples of such sites - Hotelscombined, Trivago, Kayak, Webjet, Icelolly)
There are more risks than advantages involved in using such sites.
These sites should only ever be used for their original intended purpose - to compare, nothing else.
4. Request Based Reseller Sites
These sites are the most dangerous of all, and should be avoided at all costs. Whilst it is not illegal, their business model is based on upfront payment, and they then shop around for the best price they can find. It is akin to the consumer hiring a poorly trained travel agent, and hoping they can keep a price promise. Often they advertise unrealistic and often outdated rates, and when they cannot find a particular requested hotel at a profitable rate, they will contact the consumer to say that the rate has increased. In the worst-case scenario, they will not inform you at all, and you will only discover this when you arrive at the hotel to find no reservation was ever made.
One of the keys in identifying these websites, is by looking for certain terminology in their policies. Repeated references to anything about 'their supplier' unable to honour or provide, and full refund, is usually a strong indicator that they are resellers. Also, any clauses that advise the possibility of the price increasing is another. No directly contracted agent, will change your rate after payment.
Avoid using at all costs. (Examples of such sites - AlphaRooms, Otel.com, Hotelopia, Olotels.com, Prestigia, Travel Republic)
5. Retail or Package Sites
These types of reservations are commonly available, not only on hotel booking sites, but also on airline sites, high street travel agents (shop) and tour companies. Referred in the travel industry as GDS (Global Distribution System) bookings, reputable companies can provide unbeatable savings, as they piece together separate travel components, purchased in bulk at wholesale rates, which are unavailable to the general public. However, they have one major catch - they all come with extremely strict conditions attached, very little changes permitted without extra costs, and usually only available for certain seasonal travel periods. (Examples of such sites - Zuji, Flight Centre)
Having stated this, should the conditions be acceptable, there are some guidelines to follow;
6. Opaque or Bidding Sites
These are often referred to as "blind sites", where by consumers bid for or outright purchase, rooms in a designated area, without actual knowledge of the property. These agents are completely price driven, and whilst it maybe to the benefit of experienced users, or those who don’t particularly care as long as they obtain very cheap rates within a certain locality, they are risky in that often the properties may not meet expectations. (Example of such sites - Hotwire, Priceline)
Should a consumers wish to use these type of sites;
7. Group Discount Buying Sites
Whilst these sites do not fall directly into the category of an Online Travel Agent, the recent surge in the number of these discount sites, has created a need to mention them.
Group-buying websites work on a "Deal of the Day" type specials, negotiate deals with individual businesses, which are then offered to subscribers or via social networks. Consumers are required to pay the voucher company upfront, then uses the voucher to claim the product or service from the individual business.
These sites have had a fair share of the media spotlight - many for the wrong reasons. Grievances include offers not living up to what was promised, inaccurate descriptors, long delays obtaining goods or services paid for upfront, extremely limited availability, plus fine print that makes vouchers difficult to redeem before expiry. There are also question marks over the difficulties in obtaining refunds when they have a problem. (Examples of such sites - Groupon, Scoopon, Cudo, Catch of the Day, Deal of the Day)
Some important points to consider;
8. Travel Clubs/Membership Discounted Sites
These type of travel agents sell memberships to join a 'discounted travel club'. Many of these business models, depend greatly on the membership fees, to purchase wholesale rooms, and poor value timeshares. Their presentations and brochures are almost always glossy and attractive, but they are also the most scheming, and the type of business that can ruin your finances. There are endless horror stories of people buying into holiday schemes, and losing their retirement savings. It's the type of business that is most scruntinised globally, with legal proceedings ongoing for years on end.
This business model is never recommended, and should absolutely be avoided at all costs. Nobody ever gains value, for what they've paid. Ever. Typically, they advertise themselves as 'Getaway', 'Vacation Club' and or 'Escapes'
Should anything be of concern with your planning, whether it be online or through a high street agent, the default advice is to always contact the hotel or supplier directly first, and weigh up your options before making financial commitments.
Safe and happy travels!