The importance of the Online Travel Agencies for the Hotel industry

– The case of the Água Hotels Mondim de Basto

Catarina Freitas Da Mota

Instituto de Estudo Superiores de Fafe/Escola Superior de Tecnologias de Fafe

Rua Universitária - Medelo, Apartado 178, 4824-909 Fafe, Portugal
catarinamota@iesfafe.pt

ABSTRACT

With the accomplishment of this article, we intend to address the importance of the e-
commerce for the hotel industry in Portugal, over the last years, giving emphasis to Online Travel
Agencies and its importance for the sales success in the hotel accommodation units and what the
advantages over traditional travel agencies.
In recent years, e-commerce has revolutionized the way tourists plan their travels and make
reservations for accommodation in the different hotel units existing and promoted by Online Travel
Agencies. Given these new habits, online sales of tourist products and services have experienced a
considerable and significant increase in these last decades and, consequently, the process of pre,
during and post purchase of travel has undergone immense changes. There is, therefore, a need on the
part of the various tourist reservation channels to keep up with these new trends and thus to gain
representativeness in the tourism sector.
The emergence of Online Travel Agencies has become a global phenomenon and currently
accounts for a significant percentage of online travel sales as well as other tourism products. With
these sales channels, tourists, in addition to booking online, have the opportunity to do research in the
desired area, as well as compare the various products available, without having to travel to traditional
travel agencies.
It is also worth mentioning that we will also address in this article such as Online Travel
Agencies, Booking.com and Expedia.com and that we intend to elaborate a case study about an
accommodation unit belonging to a hotel group with already some hotels distributed throughout the
country, in order to demonstrate through concrete data that e-commerce has been revolutionizing
sales, in this same unit, over the last three years.

KEYWORDS: E-commerce, Online Travel Agencies (OTAs), Hotel industry, Sales success,
Booking.com, Expedia.com

1 INTRODUCTION

With the emergence and development of the internet, there has been a need on the part of
some tourism stakeholders to evolve according to these new needs, such as online travel agencies or
online review sites. We have come to notice that online travel agencies have seen their opportunities
increase even without allowing direct contact with the end customer.
The evolution and growth of Online Travel Agencies were considered a threat by traditional
travel agencies, thus increasing levels of competition in the industry (Toh, DeKay and Raven, 2011).
The consumer of traditional agencies is more traditional, does not like to take risks while the
online consumer is more innovative and impulsive. Pricing is one of the main differentiating factors
between online and traditional travel agencies, since Online Travel Agencies have lower fixed costs
and can offer better prices (Mayr and Zins, 2009).
Other important factors that can make a customer choose traditional or online channel are
security (Kim and Lee, 2004, Ku and Fan, 2009) and perceived risk by the customer (Amaro and
Duarte, 2013). Several authors argue that it is possible to coexist the two realities in the market, since
they have different interactions with the client, although they provide similar services.
Traditional travel agents can reach the online world where OTAs are experts, while Online
Travel Agencies can try to include a more personalized dimension and gain something in that market
share, as has been noted over the past few years, once that we can view images, compare prices and

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analyze the various online reviews in order to help those who buy online to choose more quickly
where and in which hotel establishment intends to stay overnight.

2 ONLINE TRAVEL AGENCIES

OTAs emerged after 1990, currently dominate the hotel industry and play a key role in the
online distribution of travel products and services. According to Kim and Kandampully (2009), OTAs
have developed a successful business in the current market by aggregating multiple products / services
and reducing fixed costs in order to provide consumers with more attractive products. With the growth
of the online marketplace and, consequently, of the online travel agencies, it is verified that not all the
portals provide the same products / services, some only allow to book accommodation (ex:
Booking.com) and others allow to book flights and rent cars, among other services (ex: Expedia.com).
The basic function of an OTA is to provide the consumer with several options, containing the
necessary and possible information in order to assist the consumer in the decision process and often in
the final purchase (Pan, Zhang and Law, 2013). To achieve this goal, OTAs collect and publish all the
information they deem necessary and relevant to their guests.
OTAs are essential for a hotel unit, since they help to give visibility to it, thus increasing the
interest of tourists (Inversini and Masiero, 2014). Currently, OTAs account for a large share of hotel
sales, thus gaining power (Carroll and Siguaw, 2003).
Several studies confirm that travelers use OTAs to search for information about a particular
hotel. However, tourists end up booking the room on the hotel's website or through the phone (Wu,
Law and Jiang, 2013). Previous research suggests that this is due to the fact that tourists enjoy
personal contact, especially over the phone and try to negotiate the price, trying to get prices more
attractive than those published online.
In order to induce customers to book their portals, OTAs usually offer special discounts or
promote travel packages (Toh, DeKay and Raven, 2011). According to Pan, Zhang and Law (2013),
the hotels that are located at the top of the home page of OTA research attract more interest, since they
are usually the ones that have the best score, hence arousing greater interest to those who are looking
for of a good experience.
Among OTAs, it may happen that they are involved in discount campaigns that allow them to
obtain market share, but which cause price wars that can be harmful to the business. These agencies
can carry out certain campaigns and reduce prices, due to the nature of the business since the use of
the Internet tends to reduce the fixed costs of the structures (Chakravarthi and Gopal, 2012).
Sometimes, OTAs choose to have losses in order to reach market shares and make the brand
known (Cotsis, 2014; Lehmann, 2003). Nicolau (2013) defends that price wars can be detrimental to
an OTA since price is associated with quality and the perceived risk of purchase. The consumer is
willing to pay more to feel more secure with their purchase.
A pleasant atmosphere has positive consequences for e-commerce (Novak, Hoffman and
Duhachek, 2003); on the other hand, the security element has negative consequences, and should be an
important element in the design of the website (Sousa and Simões, 2010). The same author points out
this element as one of the main ones for not buying a certain product, since the user feels insecure
about the purchase and can point out the perception of risk with one of the main obstacles to the
growth of e-commerce.
Currently, it is one of the big bets on online sites, trying to transmit security in their data
protection. E-commerce brings added value as it allows a store to be available to reach its customer 24
hours a day, 7 days a week and with accessibility from multiple locations (Novak, Hoffman and
Duhachek, 2003); reduction of fixed costs; increase in purchase options (Narayandas, Caravella and
Deighton, 2002), which increases the effectiveness and efficiency of demand.
Website design, ease of navigation, information content, images, performance quality and
post-purchase policies are key factors in the success of e-commerce.
With the emergence of the use of technology in the process of buying travel, it is necessary
that the hotel units, OTAs and other stakeholders understand the main determining factors in the
purchase decision of the tourist.

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2.1 BOOKING.COM

Founded in Amsterdam in 1996, Booking.com is no longer a small Dutch startup to be one of

the largest e-commerce travel companies in the world.
Priceline Group is renamed Booking Holdings, as announced to the market in February of this
year 2018, justifying it with the fact that Booking.com is its largest brand, with an average of more
than one million bookings per day .
The mission of the company is to "help leisure travelers or work with any type of budget to
discover, book and enjoy the best accommodation in the world." (Booking.com). Unlike other OTAs,
it is dedicated exclusively to the sale of accommodation and presents various types of accommodation,
from hotels to campsites.
The importance of the Booking brand was highlighted by the group's CEO, Glenn Fogel, who
pointed out that OTA markets stays in more than 1.5 million properties and is the brand that
commercializes and produces more "a significant majority" of reserves and results the group.
Glenn Fogel (2018) also stated that "they are at a defining moment in the company's history,"
which justified the change denomination with the goal of "more closely aligning the company's name
with its larger business."
The move, he added, is also intended to link the group's name "to a name that reflects its
shared ability to help customers book fantastic experiences as well as better reflect the truly global
operation we have become."
The group, which will present its annual balance sheet later this month, presents itself as the
number one worldwide in the marketing of online tourism products, reaching in the third quarter of
2017 gross reserves in the amount of 21.8 billion dollars, an increase of 18% over the same period of
2016.

2.2 EXPEDIA.COM

OTA Expedia.com was founded in 1996 by American-based Expedia Inc., which operates
with several tourism-related companies. Currently, the portal operates in 31 countries and unlike
Booking.com, in addition to selling only accommodation; it also includes flight reservations, rental
cars, cruises and activities, among others.
The added value of this platform is the creation of value through tour packages. The hotel
units can be on the platform through two global distribution systems and special rate. Nowadays,
Expedia.com has acquired the Tripadvisor portal, known to be the largest online review site in the
world.
One of the factors of great importance in OTAs and hotel units is the need to show the
customer the quality of service. Hennig-Thurau et al. (2004) state that online reviews are the new style
of mouth-to-mouth and that the published comments are a reliable resource and help the online
consumer to make a decision.
OTAs allow your customers to post their opinions, as well as research other customers'
opinions. These comments have increasingly become a deciding factor at the time of purchase (Sparks
and Browning, 2010).
The comments posted by online consumers are considered by other consumers as an important
source of information (Hu, Liu and Zhang, 2008). More than 60% of tourism consumers consult their
online reviews before making an online purchase (Global Market Research, Panel Quality, Lightspeed
GMI).
These recommendations are considered important because they involve actual experiences,
assessments and opinions, since those who give them have already experienced the experience.
According to Filieri and McLeay (2014), online reviews have a high level of credibility when
compared to other sources of information.

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3 AGUA HOTELS MONDIM DE BASTO

Agua hotels
otels Mondim de Basto is a tourist resort belonging to a hotel group that currently has
six accommodation units distributed from north to south of Portugal, with a seventh to be opened also
in the northern region and a unit in Cap
Cape Verde, on the island of salt.
The Agua hotels Mondim de Basto is set in an area of 200 hectares, cut by the Tâmega River,
in a stunning natural setting, right next to the Senhora da Graça mountain range in Mondim de Basto
and has 82 rooms.
Also in this hotel unit, it has been verified that the OTAs have contributed significantly to the
increase in sales, and more and more people are worried about comparing prices, amenities, activities
activi
to be developed in their respective accommodation units and surroundings, among many other aspects
and being one of the highlights in the region, its location, its services and prices, is always on top of
Booking.com when searching for hotels in the rregion of Basto.
Therefore, according to the head of the commercial department of this unit, it was found that
Booking.com is the OTA that stands out the most, reaching unprecedented values in the last three
years, as we can see in the following figure (Figure 1).

327.983,56 €
522.891,03 €

427.462,76 €

Ano de 2016 Ano de 2017 Ano de 2018

Figure 1: The sales of Booking.com in Agua

gua hotels Mondim de Basto

Regarding Expedia.com, it appears as the second most important sales promoter for this hotel,
as OTA, as can be seen in the following figure (Figure 2).

13.743,13 €
18.378,24 €

19.387,85 €

Ano de 2016 Ano de 2017 Ano de 2018

Figure 2: The sales of Expedia in Agua hotels Mondim de Basto

As for online review, these are fundamental to assess customer satisfaction with the services
provided. Reviews are featured in various website arts, from average scores, most relevant reviews
and feature in the reviews
eviews with the best score.
According to Mateus (2015), the consumer considers that the information in the online
reviews is correct, accurate and reliable, which demonstrates that it is important for the consumer. The
same author argues that the consumer considers that the units with the highest number of reviews are
more popular housing, thus increasing their credibility.
Filieri and McLeay (2014) argue that online reviews have the ability to satisfy users' needs in
the purchase decision process.

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 In the case of Booking.com, there are specific evaluation criteria proposed by OTA itself in
which guests have the possibility to give a score of 0 to 10 values about these, in order to evaluate
their experiences and experiences throughout the stay.
In addition to evaluating with a score they also have the possibility to make comments be they
positive or negative.
The criteria are always the same, being these cleanliness, comfort, location, amenities, staff,
price / quality, internet and breakfast. In the case in question, we will address the scores given in 2017
and 2018, and the previous years, in this specific case for the year 2016, the data were eliminated from
the platform and thus it is not possible to make any comparisons (Tables 1 and 2).

Table 1 Buyers evaluation of Booking.com in Agua hotels Mondim de Basto in 2017

2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cleanliness - 8,10 8,10 8,30 8,4 8,40 8,40 8,30 8,40 8,40 8,40 8,40
Comfort - 8,10 8,10 8,30 8,3 8,40 8,40 8,10 8,20 8,30 8,20 8,30
Location - 8,60 8,60 8,60 8,5 8,50 8,50 8,50 8,60 8,10 8,60 8,10
Comodity - 7,90 7,80 8,10 8,1 8,10 8,10 7,90 8,30 8,30 8,20 8,20
Staff - 8,20 8,20 8,20 8,3 8,30 8,30 8,30 8,00 8,10 8,00 8,10
Price/Quality - 8,00 8,00 8,10 8,3 8,40 8,40 7,90 8,00 8,00 8,00 8,00
Internet - 8,20 8,10 8,00 8,0 8,00 8,00 7,90 8,00 8,60 8,00 8,60
Breakfast - 8,10 8,10 8,10 8,0 8,00 8,00 8,10 8,30 8,20 8,10 8,20
Total Average - 8,15 8,13 8,21 8,24 8,26 8,26 8,13 8,23 8,25 8,19 8,24
Source: Sales department of Agua hotels Mondim de Basto, Octobre 2018

Table 2 Buyers evaluation of Booking.com in Agua hotels Mondim de Basto in 2018

2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cleanliness 8,30 8,40 8,40 8,4 8,50 8,50 8,50 8,80 8,70 8,70 - -
Comfort 8,30 8,30 8,30 8,3 8,30 8,40 8,60 8,80 8,70 8,70 - -
Location 8,30 8,60 8,60 8,6 8,60 8,60 8,60 9,00 8,90 9,00 - -
Comodity 8,30 8,00 8,10 8,1 8,10 8,10 8,60 8,70 8,50 8,50 - -
Staff 8,30 8,30 8,30 8,3 8,30 8,40 8,40 8,50 8,40 8,50 - -
Price/Quality 8,30 8,10 8,00 8,0 8,10 8,10 8,30 8,10 8,00 8,00 - -
Internet 8,30 8,10 8,10 8,0 7,90 7,90 8,00 8,10 8,00 8,10 - -
Breakfast 8,30 8,20 8,20 8,1 8,10 8,30 8,20 8,80 8,40 8,45 - -

Total Average 8,30 8,25 8,25 8,23 8,24 8,29 8,40 8,60 8,45 8,49 - -

Source: Sales department of Agua hotels Mondim de Basto, Octobre 2018

With regard to Expedia.com, today, its great success is due to the fact that it allows the users
to give notes to the hotels, to write reviews and to read the comments made by other travelers. The
services offered by Expedia.com are currently available: reservations and purchases of air tickets,
hotels, cruises, travel packages and tickets for various attractions, as well as car rental.
After all, even if the tourist knows exactly which trip he wants to do, he needs some ideas or
help to restrict him search, and Expedia.com offers this facility through her online review,
Tripadvisor.com.
In the case of Tripadvisor.com, the evaluation criteria are referring to the quality of sleep,
location, rooms, service, price / quality and cleanliness and the score is 0 to 5 values.

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 In Agua hotels Mondim de Basto, we can see the ratings given by guests in 2017 and 2018,
and 2016 data has also been eliminated. The data that will be presented are related to Tripadvisor.com
(Table 3 and 4).

Table 3 Buyers evaluation of Tripadvisor.com in Agua hotels Mondim de Basto in 2017

2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Quality of sleep - 3,9 4,5 4,1 4,0 4,50 3,70 3,60 3,80 3,90 3,80 3,90
Location - 4,4 4,5 4,1 4,2 4,20 3,90 4,70 3,90 3,80 3,90 3,80
Rooms - 3,7 3,7 4,1 3,9 3,90 4,70 4,20 3,80 3,80 3,80 3,70
Service - 4,0 4,0 3,8 4,0 3,90 4,10 3,80 4,20 4,20 4,20 4,20
Price/Quality - 3,7 3,5 4,0 3,7 3,70 4,10 3,60 3,80 3,90 3,80 3,60
Cleanliness - 3,8 3,6 4,2 3,9 3,90 3,60 3,80 3,50 4,00 3,50 4,00
Total Average - 3,92 3,97 4,05 3,95 4,02 4,02 3,95 3,83 3,93 3,83 3,87
Source: Sales department of Agua hotels Mondim de Basto, Octobre 2018

Table 4 Buyers evaluation of Tripadvisor.com in Agua hotels Mondim de Basto in 2018

2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Quality of sleep 3,90 3,9 4,8 4,0 4,5 4,50 4,00 4,20 4,30 4,00 - -
Location 4,40 4,2 4,2 5,0 5,0 4,20 4,00 4,80 4,60 3,80 - -
Rooms 3,80 3,9 3,8 4,0 4,0 4,00 4,00 3,80 3,80 4,00 - -
Service 3,60 4,0 4,0 4,0 4,0 4,00 4,30 3,80 3,80 5,00 - -
Price/Quality 4,00 3,9 3,9 4,0 4,0 3,50 4,40 3,80 3,80 5,00 - -
Cleanliness 3,80 4,1 4,1 4,2 4,0 4,00 3,80 4,50 4,50 4,70 - -
Total Average 3,92 4,00 4,13 4,20 4,25 4,03 4,08 4,15 4,13 4,42 - -
Source: Sales department of Agua hotels Mondim de Basto, Octobre 2018

4 CONCLUSION

We can conclude the increased use of the Internet as a means of making reservations
contributed to the dominance of OTAs in the tourist market. Online distribution channels offer the
right information to the right people at the right time to allow the right purchase and thus provide the
consumer with the purchase.
In Portugal, the challenges facing the different stakeholders operating in the tourist
distribution market are known. The emergence of information technologies (Internet and social
networks) and the need for a new commercialization model may underlie the decreasing efficiency of
the policies adopted by this sector, since traditional travel agencies tend to fall into disuse great trip
from online travel agencies.
The tourism consumers of the two channels (traditional travel agencies vs. online travel
agencies) have completely different profiles. While traditional channel tourists are looking for a
personal consulting service, efficient reservations, more payment options and direct marketing
promotions, online channel users are looking for convenience and better deals.
In fact, OTAs have become more and more prominent in the hotel industry and are being
added to the increase in sales in housing units, as the results are clear and in the case of Mondim de
Basto Water Hotels, this factor has been a reason for the significant increase in revenues and has made
tourists from all over the world come to seek and know this little paradise.
After completing this article we can also take as an illustration that the OTA that stands out
most in our case study is Booking.com, because through this search engine, people have the possibility
to see online reviews left by other travelers and hence take some experiences and experiences, in order
to make a decision about the accommodation unit where you want to stay overnight, as well as

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compare prices, view photos of the different housing units and see the promotions in force at the time
of the search.

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Web sites:
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a-adoptar-a-sua-denominacao/, consulted 14 Novembre 2018.
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Web-3: https://hotelaria.blogs.sapo.pt/booking-com-o-gigante-das-reservas-9422, consulted 14
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Web-4: http://mundodasmarcas.blogspot.com/, consulted 17 Novembre 2018.

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