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Why you should work with aggregators

For the majority of FareHarbor’s clients, Google is the leading source of traffic outside of direct visitors (Google accounted for 67.4% of US web searches in July 2014). And it’s a cutthroat world on Google. Businesses are not only competing against competitors for space on the front page of Google search results, but they are competing against TripAdvisor, Yelp, other review sites, and aggregators (online travel agents) too. In later posts, we will examine how to best use review websites and why you should actively monitor and solicit reviews.

With margins thin in the tour, activity, and attractions space, many companies are hesitant to list with online aggregators. Aggregators are defined as an “Internet company that collects information about competing products and services and distributes it through a single Web site” by the The Oxford Pocket Dictionary of Current English. In travel, this could mean anything from a company that lists all tours in an area, like Hawaii Activities listing Hawaii tours or Scubaba listing all scuba companies. For those unfamiliar with online aggregation, it usually works like this: You list your tour with an online aggregator. Listing is usually free (although some do charge upfront setup and listing fees). For every booking generated via the online aggregator, a commission is paid. This rate most often ranges from 15% to 30%.

Most tour companies believe that anything higher than the standard 20% travel agent referral fee is too high a price to pay for incremental revenue. In many cases they would be right. Aside from pricing, companies worry that aggregators will steal business by organically listing higher for keywords, or aggressively bidding on cost-per-click marketing tools, like Google Adwords. But what about the billboard affect? Let’s look to the hotel industry that has many more aggregators and much more data! According to a WIHP study, “over 20% of direct bookings occurred after the guest found the hotel on an OTA. Which shows us, being on an OTA can also increase your direct bookings.” And according to a Google Study, “52% of travelers visit your hotel’s website after seeing you on an OTA.” (read more here: http://www.thinkwithgoogle.com/tools/customer-journey-to-online-purchase.html

What should you do?

So what does all of this data say? Make sure to work with aggregators that want to be your partner–the best in class are more concerned with selling your company than your activity. Work with aggregators that will provide you with additional direct bookings! Do not work with aggregators that effectively white label your product. As an example, when searching for parasailing in Waikiki, you will find two types of aggregators. 1. Those that compete on price and ease of booking. These aggregators tell you exactly who you are making a reservation with. 2. Those that tell you that you are purchasing a parasail ride. They don’t tell you who you will be riding with. All they provide is a good review (is it even real?). They compete on price too–you just won’t have the opportunity to price shop given that you don’t know whose goods you are buying.

You built your product on your reputation. Don’t let people sell you as a basic tour. And don’t limit the number of aggregators you work with or have a “number.” As long as the price is right and they are marketing your business, you should work with them. On a side note, it is important to remember what was discovered in a recent JD Power survey on hotels and aggregators: “Guests who book through an online travel agency (OTA) tend to be more price sensitive; have lower levels of satisfaction with their stay; are less loyal to hotel brands; and tend to report more problems, compared with guests who book through the hotel website or call the hotel or hotel brand directly.

If your aggregator is pushing you to use their backend to manage all of your reservations, I recommend you read our post on “Don’t let aggregators control your backend.”