Distribution Strategies

Hudson Crossing has predicted that a major OTA brand will be sold in 2009

Published: 13 Jan 2009

Hudson Crossing has predicted that a major OTA brand will be sold in 2009

The strategic advisory firm, which has predicted that significant consolidation and restructuring of the travel industry is inevitable in 2009, has highlighted that the space for online travel agencies (OTAs) has become crowded and the current downturn in consumer spending on travel will force one major OTA into a change of ownership.

"The challenges that face OTAs are numerous and multifaceted. From the competitive view, OTAs are experiencing sustained pressure from suppliers who are increasingly competing for direct bookings with travelers while simultaneously compressing OTA margins," said Michael W. McCormick, managing partner, Hudson Crossing.

He added that independent hotels have discovered the effectiveness of search engine optimisation and pay per click advertising, which is allowing them to efficiently reach consumers without an intermediary. In addition, price parity now exists for much of the inventory found with OTAs.

"Firms like Kayak are creating additional disruption by continuing to aggregate consumer booking demand, further distancing OTAs from their end consumer. One bright spot will be the opaque providers such as Priceline and Hotwire who will comparatively benefit from increased hotel inventory and lower net pricing along with an increase in price sensitive buyers," said McCormick.

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