Assessing the Impact of Online Travel Agencies on Hotels and Travellers

Résumé

This study evaluates the impact of booking channel availability and price setting on demand patterns and welfare for hotel rooms in the EU. We estimate a one-level nested logit demand model for hotel room nights which includes three different quality segments as nests. We find in an counterfactual analysis that the removal of OTAs would lead to a decrease in overall producer profits accompanied by decreases in consumer surplus and occupancy. These decreases are most pronounced in the midscale and upper midscale segment, and least in the luxury segment. Only a few well-positioned hotels would benefit of the removal, as overall producer surplus would decrease by 8%.