Online travel agencies are turning out to be very expensive retail channels for the hotel industry, according to research firm STR. STR recently estimated that OTA sales cost US hotels USD 2.5 billion in potential revenue last year.
That estimate, reported earlier this month, emerged when STR attempted to quantify financial stakes in the often uneasy relationship between hotel owners and OTAs such as Expedia, Orbitz, Priceline and Travelocity, each of which sells a sizeable chunk of room inventory each year, according to a report by Danny King in Travel Weekly.
STR estimated that the OTAs accounted for about 7.2 per cent of the approximately USD 120 billion revenue realized by US hotels in 2010. While that USD 2.5 billion figure has been pretty consistent over the past couple of years, it dwarfs the USD 1 billion that OTAs “cost” hotels as recently as 2004, said Mark Lomanno, Chief Strategy Officer, STR.