Online travel agency, also known as OTAs, are third party services that connect providers across the travel industry to help travelers find the best deals on accommodations, flights, car rentals, cruises and tours. Many OTAs offer package deals, flash sales and other promotions that drive millions of bookings to their partners every day.
For property owners, OTAs are a critical component of their distribution strategy. They offer the reach and visibility that individual properties cannot achieve on their own and often provide valuable data and insights into booking trends and travelers’ preferences. But it’s important to understand the pros and cons of working with OTAs so you can make an informed decision about which ones are right for your business.
OTAs are a fast-growing segment of the tourism industry and have become the go-to source for researching, planning and booking travel. They are the Everything Store for travel, with a wide selection of choices and a simple process. Unlike traditional travel agents, they are accessible from any device, 24 hours a day, and are an essential tool for the majority of today’s travelers.
In some states, OTAs are the merchant of record and collect and remit taxes on lodging transactions. In other cases, they are a marketplace facilitator and collect tax on third-party lodging supply (on the net rate) but not on hotel accommodation transactions (which is collected by the hotel as a hotel-collected or prepay rate). The lack of clarity about who’s liable for what taxes can lead to undercollection or overcollection of these fees. online travel agency