Travel websites have almost completely eliminated travel agents unless you want a specialty vacation. While this is great for travelers because you can easily book flights and hotels, there are a number of people wondering how these websites make money. Many of the biggest travel websites are making millions of dollars in profit, but they don’t charge you any obvious fees like an agent would. Here are the four ways that travel websites generate income.
Small Fees
This strategy is being phased out because it isn’t quite as lucrative or popular as the others, but some travel websites place small fees on certain booking options. For example, there might be a fee on premium flights or hotels. These fees usually aren’t listed on the website. You will only notice the difference if you check the airline’s or hotel’s website for their official prices, which might be somewhat less than what you see on the travel website.
The fee strategy is becoming less popular because people don’t want to pay anything extra to book travel arrangements. Most of the biggest websites are relying on the other three methods to generate their income.
Commissions
This is one of the most popular ways to make money because it forces the airline or hotel to pay the travel website. Many of these places have created deals with travel websites stating that the website will make a certain percentage of the booking fees for every customer.
While most travel websites have not released what their average commission percentage is a traveler can estimate that the percentage is fairly low. This allows the airline or hotel owner to easily profit from the travel website without having to increase prices or cut corners to save money.
This type of deal is usually extended to popular hotels and airlines because they will definitely attract customers, and it’s a low-risk move for both the travel website and the airline or hotel owner.
Listing Fees
This strategy is also popular because it forces the airline or hotel owner to pay the travel website even if there aren’t any customers. These owners will pay just to have their services listed on the website. This is attractive to the service providers because big travel websites will gain them a lot of exposure for a relatively small investment.
These businesses may also have to pay a commission if someone books a flight or room with them depending on the specific website’s policies. The listing fees are relatively low considering how much money the company makes if someone uses their service.
While this might be used with popular airlines and hotels, this type of strategy is usually applied to newer or less popular businesses because the travel website’s owner doesn’t know if the commission strategy will be commercially viable. Charging a listing fee ensures that the travel website makes money even if the airline or hotel doesn’t get a single customer.
Advertising
Travel websites also make a substantial amount of advertising revenue. This is similar to the listing fees strategy because the airline or hotel owner is paying money to have their business listed, but the listing is different. Instead of their listing being grouped with similar businesses, the ad will be placed on the side of the page. The ad will also be accompanied by graphics and text so that users notice it.
Advertising fees are often substantially higher than listing fees because of their advantage. A powerful ad can exponentially increase the number of customers that the business gets through the travel website. Considering that millions of people visit the top travel websites, it’s worth spending the extra money for more exposure.
While some websites allow the ads to point to external websites, the vast majority will bring you to a booking page within the travel website so that they don’t lose any traffic.
These strategies are how travel websites make money. They allow the websites to make a substantial profit without charging the customer much or any money.
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Marvin Kersey writes on web development, SEO, gadgetry, computer software, laptops, tablets and tablet accessories such as the kensington ipad keyboard case, video games and other related matters.
Image credit goes to Vanessa (EY).