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The State of Online Travel Agencies 2018 Part I: Advertising

by Seth Borko + Skift Team - Jun 2018
Digital Marketing
Distribution

Skift Research Take

Online travel agencies remain essential to the travel industry as consolidators of and clearinghouses for advertising dollars throughout the space. We do not see OTAs being removed from this position easily, but challenges are growing by the day.

Report Overview

Skift is dedicated to following the nuances of the online travel agency (OTA) market. With more happening online than ever, this year we are breaking our online travel agency coverage into a multi-part series exploring different aspects of the business model in depth. The first part of our series looks at advertising spend by online travel agencies in North America and Europe. Upcoming parts of the series will include a look at OTA-supplier dynamics and emerging market OTAs.

In this report, we survey the state of online travel agency (OTA) ad spending in North America and Europe, specifically Booking Holdings and Expedia. These OTAs are well-oiled machines that are some of the largest marketers in the world.

However, they face growing challenges. Hotels and airlines have launched major campaigns encouraging consumers to book direct and search ad auctions are crowded. We analyze the state of OTA ad dollars and find that despite the large dollar figure, efficiency is declining. New ad dollars do not appear to generate as many bookings as they once did.

Ultimately the online travel agencies remain essential to the travel industry. They act as consolidators of and clearinghouses for advertising dollars throughout the space. We do not see OTAs being removed from this position easily, but they must remain nimble — upping their brand advertising, while tailoring their substantial ad spend for maximum booking potential — to keep pace.

What You'll Learn From This Report

  • Size of ad budgets at major online travel agencies
  • Comparison of travel ad spending to other industries
  • Analysis of ad efficiency at OTAs
  • A look at the shifting landscape between brand and performance ad spending
  • Margin analysis of OTAs

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