How platforms like Booking.com help lodging partners grow their business while delivering savings for American consumers
The key takeaways from the latest study by Oxford Economics about the impact of online travel agencies in the U.S.
In the span of three years (2019–2021), travelers in the US saved nearly $50 billion on lodging, regardless of how they booked it. This is but one of the conclusions to draw from a recent study by Oxford Economics titled: The Economic Impact of Online Travel Agencies in the United States.
Despite severe setbacks within the tourism sector caused by the COVID-19 restrictions, online travel agencies (OTAs) continued to bring international guests to U.S. hotels, supporting jobs and boosting GDP. So, what’s the state of play for online platforms, and have the economic benefits they generate withstood the test of a global pandemic?
For scholars in the hospitality industry, 2019 constitutes a reference year. It may now look distant, but in reality presents the best proxy for research. Zooming in on this benchmark year 2019, Oxford Economics found that online travel platforms contributed an additional 47.5 million room nights, supported 167,000 jobs, and created $18.6 billion of additional GDP in the U.S. What’s more, the choice, trust and convenience of OTAs translated into a tangible consumer benefit — a cost savings of $8 per night on average in the U.S. hotels, guesthouses, b&bs and other independent accommodations. The cumulative effect of these price reductions amounted to $21B of consumer savings in 2019 alone.
Fast forward to 2020–2021, and it’s a brand new world of unpredictability, lockdowns, and restrictions.
A confidence boost for travel
In this difficult environment, defined by hesitation among travelers, online travel platforms continued to increase trust and embolden travel decisions.
In the two years leading up to 2022 — at the height of the pandemic — digital platforms:
- helped vacationers save $7 per night, which added up to $29B ($11B of consumer savings in 2020, and a further $18B in 2021)
- delivered over 65 million additional nights to the U.S. hotel market (30.5 million in 2020, and 34.7 million in 2021);
- supported 93,000 jobs in 2020, and 106,000 jobs in 2021;
- and contributed $20.6 billion to GDP ($9.9B in 2020, and a further $10.7B in 2021).
The report also revealed that the independent, small-to-midsize hotels are overrepresented on digital platforms when compared to the market as a whole. On Booking.com alone, over 180,000 independent lodging providers in the U.S. choose to list their rooms.
It is clear that independently-managed properties benefit strongly from the opportunity to market themselves to an international audience and compete on a more level playing field with the well-known global chains.
The pandemic has muddled the established industry patterns, but in 2019, 46% of online platform users stayed at independently-operated lodging, compared to 28% for hotel guests overall. If history is any indication, this ratio will be restored in 2023 and onwards.
From urban to rural
Online travel platform activity has gained significant ground in rural areas since 2019 — more quickly than in urban ones.
Between 2012 and 2021, the percentage of nights booked in rural areas through online platforms has grown from 9.7% to 16%, which represents a disproportionate share of activity, given that only 15.3% of U.S. jobs are located at businesses in the least densely populated areas.
By offering consumers more choice, online travel platforms help to spread out tourism away from city centers, and direct economic activity towards alternative destinations, resulting in localized growth and job creation.
Alternative accommodations
Cabins, villas, chalets, chateaus, short-term rentals, boats — essentially anything but a hotel — is a category known as alternative accommodations. And they too benefit from partnering with online travel platforms. For the last two years, OTAs increased the number of overnight stays in alternative accommodations in the United States, and, by 2021, bookings of alternative accommodations purchased via online travel platforms created an additional 8.2 million nights, gaining half a million nights on the 2020 figure.
It’s a world of choice
Online travel platforms make it easy for travelers to compare thousands of options in a multitude of destinations, resulting in greater transparency, increased trust, and lower costs. To put it simply, online platforms level the playing field for all tourist properties regardless of type, size, or affiliation.
Platforms like Booking.com provide instantaneous global visibility at the click of a few buttons, and empower independent accommodation providers to stay competitive at a global scale. In this context in particular, hotel partners appreciate the risk-free nature of the partnership with platforms where commission fees are success-based, and are only incurred after a booking is made and the guest has paid.
TravelTech: How Online Travel Platforms Benefit Independent Hotels
Where travel meets tech
Accommodation sector entrepreneurs face complex trade-offs every day trying to optimize costs, manage cash flows, and keep occupancy levels up in an environment of high uncertainty. So it comes as no surprise that a recent study — by the U.S. Travel Tech association — found that approximately 70% of guests using an OTA originate from outside an accommodation’s typical area of marketing. Furthermore, 91% of hotel partners state that being listed on an OTA results in additional bookings.
‘By offering unique marketing services to independent and boutique hotels, bed and breakfasts, and other non-chain properties, these companies [OTAs] help thousands of American small businesses compete on an even footing with the large hotel chains. Independently owned and operated hoteliers garner higher profits through this cost-effective channel while being able to compete…’
Booking.com — among others — offers freedom of choice, peace of mind and affordable rates to tourists. Simultaneously, independent hotel partners stay competitive and take advantage of tailored marketing and distribution resources for a small fee, risk-free. As trustworthy intermediaries, online platforms help businesses navigate the ‘new normal’, facilitating a long-awaited and much-needed rebound in the hotel business, and forging a special bond between global travelers and the American hospitality sector entrepreneurs who host them.
