ROLE OF ONLINE TRAVEL AGENCIES IN SHAPING REVENUE DYNAMICS OF BUDGET HOTELS: A REVIEW PAPER
DOI:
https://doi.org/10.29121/ShodhPrabandhan.v2.i2.2025.82Keywords:
Online Travel Agencies, Budget Hotels, Revenue Management, Channel Economics, Direct Booking, Profitability, Hospitality Industry, IndiaAbstract
OTAs (online travel agents) are the dominant intermediaries of hotels‚ particularly for chain-affiliated budget hotels which require strong online presence‚ rapid conversion for booking‚ and a competitive price․ The OTA economy is complex․ On the positive side‚ OTAs create a market‚ making more hotels discoverable and increasing their occupancy rates․ On the negative side‚ OTAs create commission costs to hotels and drive price competition‚ reducing the hotelier's ability to drive customers to book direct․ This review paper uses findings from the literature and industry to examine the role of OTAs in budget hotel revenue management․ It discusses the concepts of hotel revenue management‚ OTA intermediation‚ channel conflict‚ consumer booking behavior‚ as well as OTA pricing pressure and profitability in the context of the budget hotel sector․ The review concluded that OTAs are effective at driving customer acquisition for hotels with little brand presence and poor marketing capabilities․ However‚ the review found that overreliance on the OTAs can lead to hotel net revenue declines due to commission leakage‚ discounting pressure‚ and a lack of direct customer relationships․ From this the paper concludes that distribution should not be seen in isolation from the overall revenue management strategy of budget hotels․ It suggests that budget hotels should adopt a balanced channel strategy in which OTAs are used to ease market access and demand stimulation‚ but which is supported by direct booking‚ online review management and guest retention to deliver long term profitability.
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