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Online travel agencies: a key player in reviving European tourism post-COVID-19

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When COVID-19 hit, and global lockdowns brought the world to a halt in early 2020, the travel and tourism industry found itself among the worst affected. Yet, despite severe restrictions, online travel agencies (OTAs) continued to bring international guests to European hotels, supporting jobs and boosting GDP. So, what’s the state of play for OTAs today, and have the economic benefits they generate withstood the test of a global pandemic?

Oxford Economics’ 2019 study found that online travel platforms contributed an additional 134 million room nights, supported 566,000 jobs, and provided a €10 reduction in the average daily hotel rate in Europe’s lively ecosystem of hotels, holiday rentals, and guesthouses, which had the added benefit of saving EU travellers more than €20 billion. Fast forward to 2022. How did the above trends play out in the last two years?

Wanderlust returns

International arrivals to Europe have yet to fully recover to the pre-pandemic levels, reaching 81% of its 2019 figure. But despite restrictions and some lingering hesitation among tourists, 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 — online travel platforms:

  • helped holidaymakers save €8 on average per night;
  • delivered nearly 100 million additional nights to the European hotel market (52.9M in 2020 and 46.7M in 2021);
  • supported 238,000 jobs on the continent in 2020, and 243,00 in 2021;
  • and brought €24.7 billion worth of additional GDP (€12.9B in 2020 and €11.8B in 2021);

according to Oxford Economics study into the economic impact of online travel agencies in Europe between 2019 and 2021.

Oxford Economics: Economic Impact of Online Travel Agencies in Europe

During the last two years, incremental bookings — which are generated thanks to OTAs — went predominantly to independent small- to midsize hotels. What’s more, when Europe’s overall travel market is considered, sales are almost evenly split between branded chains and independent establishments — but when it comes to online travel platforms, the ratio shifts to 2 to 1 in favour of independent hoteliers in 2021.

Urbanisation vs rustication

Online travel platforms also help to bridge the gap between rural and urban bookings. In Europe — where 75% of the population lives in urban areas — it’s unsurprising that 84% of travel accommodation sales were in cities and towns in 2019. However, the rural-urban split on OTAs tells a different story, as online travel platforms more than doubled the amount of sales in rural areas when compared to the market average of 16%. By offering consumers more choice, OTAs help to spread out tourism away from population centres, and direct touristic — and subsequently economic — activity towards destinations off the beaten path, resulting in localised growth and job creation.

Oxford Economics: Economic Impact of Online Travel Agencies in Europe

What’s the Alternative?

Alternative accommodations like cabins, villas, chalets, chateaus, short-term rentals, boats — essentially anything but a hotel — benefit from partnering with online travel platforms too. But here, the split between the market overall and OTA listings is virtually indistinguishable. In other words, online platforms like Booking.com do not skew the supply and demand in either destination but simply reflect the market reality where different consumers gravitate towards the offerings that best suit their needs. For example, in 2021, 46% of bookings over OTAs were for alternative accommodations as opposed to 44% across the market as a whole.

It’s a world of choice

Online travel platforms make it easy for clients to compare and contrast various options in an array of destinations, resulting in greater transparency, increased trust, and cost optimization. Essentially, the OTAs system-wide impact is to level the playing field for all properties regardless of type, size, or affiliation with a global branded chain.

As platforms like Booking.com provide instantaneous global visibility, they empower independent accommodation providers to stay internationally competitive. And in this context, hoteliers especially appreciate the risk-free nature of the partnership with platforms, where commission fees are success-based and only come due after a booking is made and the guest has paid the hotel.

Accommodation sector entrepreneurs face complex trade-offs every day trying to optimise costs, manage cash flows, and keep occupancy levels up in an environment of high uncertainty. So it comes as no surprise that an independent 2020 study — by the European Commission — found that our business model is well-suited to Europe’s small and medium-sized enterprises:

“According to the interviews with some small hotels, the cost opportunity of advertising via OTAs is instead positive… these [commission] rates are lower than the estimated marketing and IT costs necessary to ensure visibility on the market. Interviewees reported that without OTAs they would be unlikely to achieve a similar number of booked rooms.”

Statista: Online travel platforms boost total sales for independent hotels

The latest Oxford Economics study illustrates that online travel platforms continue to substantially impact Europe’s travel and tourism sector, accruing benefits for hoteliers and holidaymakers alike. We do so by providing an open, transparent booking platform with many features that allows potential clients to compare independent hotels, alternative accommodations, and world-renowned chains.

Booking.com — among others — offers freedom of choice, peace of mind and affordable room rates to millions of tourists. Simultaneously, independent hoteliers stay competitive and take advantage of tailored marketing and distribution resources for a small fee, risk-free. By acting as trustworthy intermediaries, OTAs are helping businesses take off again, facilitating long-awaited and much-needed rebound in the hotel business, and forging a special bond between the global travellers and European hospitality sector entrepreneurs who host them.

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