Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. For instance, on a $100 booking per night set by a host, Airbnb might make as much as $15, split between host and guest fees. The Airbnb story began in 2008 when two friends shared their accommodation with three travelers looking for a place to stay. Just over a decade later, it is estimated that the company now accounts for over 20% of the vacation rental industry. As a travel platform, Airbnb competes with other brands like Booking.com, VRBO, FlipKey, and given its massive amount of traffic from Google. Also, platforms like Google Travel can be considered potential competitors able to cannibalize part of Airbnb’s market.
Booking Holdings is the company the controls six main brands that comprise Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable. Over 76% of the company revenues in 2017 came primarily via travel reservations commissions and travel insurance fees. Almost 17% came from merchant fees, and the remaining revenues came from advertising earned via KAYAK. As a distributionstrategy, the company spent over $4.5 billion in performance-based and brand advertising.
Trivago is a search and discovery travel platform part of Expedia Group. Trivago is widely known as a trusted hotel comparison service. Trivago doesn’t charge based on bookings but rather through a cost-per-click (CPC) model, monetized when a hotel searcher clicks one of its advertiser listings. This referral revenue comprises most of Trivago’s income. Trivago also has another minor revenue stream via subscriptions to its Business Studio, a tool that helps hoteliers track impression and click data associated with their properties.
Born in 1996 as a travel platform of Microsoft, it would be spun off later on. Expedia became among the largest online travel agencies (OTAs) which comprise a set of brands that go from Hotels.com, Vrbo, Orbits, CheapTickets, ebookers, Travelocity, Trivago, and others. The company follows a multi-brand strategy.
Kayak is an online travel agency and search engine founded in 2004 by Steve Hafner and Paul M. English as a Travel Search Company and acquired by Booking Holdings in 2013 for $2.1 billion. The company makes money via an advertising model based on cost per click, cost per acquisition, and advertising placements.
OpenTable is an American online restaurant reservation system founded by Chuck Templeton. During the late 90s, it provided one of the first automated, real-time reservation systems. The company was acquired by Booking Holding back in 2014, for $2.6 billion. Today OpenTable makes money via subscription plans, referral fees, and in-dining with its first restaurant, as an experiment in Miami, Florida.
OYO’s business model is a mixture of platform and brand, where the company started primarily as an aggregator of homes across India, and it quickly moved to other verticals, from leisure to co-working and corporate travel. In a sort of octopus business strategy of expansion to cover the whole spectrum of short-term real estate.
TripAdvisor’s business model matches the demand for people looking for a travel experience with supply from travel partners around the world providing travel accommodations and experiences. When this match is created TripAdvisor collects commission from partners on a CPC and CPM basis. The non-hotel revenue comprises experiences, restaurants, and rentals.
Trivago is a search and discovery travel platform part of Expedia Group. Trivago is widely known as a trusted hotel comparison service. Trivago doesn’t charge based on bookings but rather through a cost-per-click (CPC) model, monetized when a hotel searcher clicks one of its advertiser listings. This referral revenue comprises most of Trivago’s income. Trivago also has another minor revenue stream via subscriptions to its Business Studio, a tool that helps hoteliers track impression and click data associated with their properties.
Key highlights of the business models from travel and accommodation platforms:
Airbnb:
Platform business model charging guests a service fee (5% to 15%) and hosts a commission (generally 3%) on reservations.
Competes with other vacation rental platforms like Booking.com, VRBO, and FlipKey, as well as potential competition from Google Travel.
Booking:
Operates under Booking Holdings, controlling six main brands like Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable.
Generates revenues primarily through travel reservations commissions, travel insurance fees, and advertising via KAYAK.
Expedia (including Trivago):
Trivago, part of Expedia Group, is a hotel comparison service monetized through a cost-per-click (CPC) model from advertiser listings.
Expedia also owns other online travel agencies like Hotels.com, Vrbo, Orbits, CheapTickets, Travelocity, among others.
Google (Google Travel):
Originally part of Microsoft and later spun off, Google Travel provides travel-related information and services.
Google Travel’s exact revenuemodel is not mentioned, but it likely generates income through advertising and possibly affiliate marketing.
Kayak:
Online travel agency and search engine, acquired by Booking Holdings in 2013.
Earns revenue through an advertising model based on cost per click, cost per acquisition, and advertising placements.
OpenTable:
An online restaurant reservation system acquired by Booking Holding in 2014.
Utilizes a mixed businessmodel, starting as a home aggregator in India and expanding into other verticals like leisure, co-working, and corporate travel.
TripAdvisor:
Matches travel demand with supply from partners, earning commission on a cost per click (CPC) and cost per thousand impressions (CPM) basis.
Non-hotel revenue includes experiences, restaurants, and rentals.
Trivago:
Part of Expedia Group, Trivago operates as a hotel comparison service, earning revenue through a cost-per-click (CPC) model from advertiser listings and also offers a Business Studio subscription for hoteliers to track data.
OTAs Business Models Recap
OTA
Business Model
Description
Key Features
Expedia
Aggregator Model
Aggregates flights, hotels, car rentals, and vacation packages from various providers. Earns commissions and booking fees.
– Extensive inventory options. – Loyalty program (Expedia Rewards).
Booking.com
Merchant Model
Purchases hotel room inventory at wholesale prices and sells to customers at retail rates. Sets pricing and promotions.
– Large inventory of hotels worldwide. – “Genius” loyalty program for frequent users.
TripAdvisor
Advertising Model
Generates revenue through advertising, sponsored listings, and affiliate marketing on its platform.
– User-generated reviews and ratings. – Offers TripAdvisor Plus subscription.
Kayak
Aggregator Model
Compares prices and availability for flights, hotels, car rentals, and vacation packages from various providers. Earns commissions.
– Focuses on user-friendly comparison tools. – Owned by Booking Holdings.
Hotels.com
Merchant Model
Owned by Expedia Group. Similar to Booking.com, it purchases hotel inventory and sets pricing independently.
– Offers “Hotels.com Rewards” loyalty program. – Extensive hotel options.
Skyscanner
Metasearch Model
Compares prices and availability for flights, hotels, and car rentals across different OTAs and providers. Earns referral fees.
– Provides comprehensive search results. – Owned by Trip.com Group.
Priceline
Merchant Model
Allows users to name their price for hotels and flights. Sells inventory at discounted rates while maintaining anonymity.
– “Name Your Own Price” feature. – Offers Express Deals for discounts.
Orbitz
Aggregator Model
Aggregates flights, hotels, car rentals, and vacation packages. Part of the Expedia Group.
What are the key components of Online Travel Agencies (OTAs) And Their Business Models?
The key components of Online Travel Agencies (OTAs) And Their Business Models include Expedia, Booking.com, TripAdvisor, Kayak, Hotels.com. Expedia: Aggregator Model
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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