The Ugly Truth About Online Travel Agencies (OTA's) in Canada

Traveler beware, Online Travel Agencies are destroying local tourism economies on a large scale

OTAs are getting into trouble because of their monopolistic practices, high commissions, and lack of contribution to local marketing efforts.

The ugly truth about Online Travel Agencies in Canada like Booking.com, Expedia, and others is that they are deceitful, facing criticism and show lack transparency for several reasons, especially in markets like Canada. Included below are ways to get a better price on your booking than what any OTA can offer when you deal directly with the tourism business. Here are a few reasons why OTAS are bad, getting in trouble and how OTA's contribute to a monopolistic environment based on my 20 years of experience and on experiences of our clients.

1. Dominance and Market Power

OTAs have gained significant market power, often controlling a large share of online bookings for accommodations, flights, and other travel services. Why is this so concerning you say? Well,,, because their dominance can lead to a monopolistic environment where smaller players, like individual hotels or local booking platforms, struggle to compete. Do not get me wrong, competition is good but monopolies are not. 

"When money, rather than innovation or value, is your competitive advantage, that's when things get boring and stagnant, and monopolies take root."

by Hank Green

2. High Commissions

One of the primary concerns is the high commission fees that OTAs charge hotels and other service providers. These fees can range from 15% to 30%, significantly eating into the profits of smaller businesses. In Canada, where many tourism businesses are small or family-owned, these high fees can be particularly damaging. These high fees are past onto the traveler. How do we stop high fees? Stop supporting these OTA's and book directly with the Canadian tourism business. If prices are higher on the business website, let them know about the OTA's price and they will beat it or match it because that puts more money in their pocket. 

3. Limited Marketing Contributions

The ugly truth about Online Travel Agencies (OTA's) in Canada is that they often do not reinvest in local marketing or tourism promotion. This is a big pet-peeve of mine. While they benefit from the bookings generated through their platforms, they contribute little to the marketing efforts that drive tourism to specific regions or destinations. This lack of investment can strain local tourism boards and businesses that rely on marketing to attract visitors. 

4. Price Parity Clauses

OTAs often enforce "price parity" clauses, which prevent hotels from offering lower prices on their own websites than they do on the OTA's platform. This is a bully tactic. This practice can further entrench the dominance of OTAs, as it discourages direct bookings and limits the ability of businesses to compete on price. How is that growing tourism? It isn't.

5. Impact on Local Economies

By funneling a significant portion of bookings through international platforms, OTAs can divert money out of local economies. Instead of profits being reinvested in local communities, they often end up with multinational corporations based outside of Canada. As far as I can remember over my 20 years of tourism experience I have yet to see an investment, a commercial, an infrastructure project, or anything for that matter invested back into our country by an OTA. 

"In 2023, Canada's tourism industry generated over 35 billion Canadian dollars. According to a 2024 paper by Tech Report, "Direct online bookings decreased from 79.2% to 66.7%. Using 66.7 % would mean that a whopping 23,345,000,000 dollars left Canada and into the bank accounts of these OTAs. That revenue use to stay in our communities. Now do you see how much they hurt our local economies!"

by Greg Girard

6. Lack of Accountability

There is also a concern about the lack of accountability and transparency in how OTAs operate. Issues like misleading listings, hidden fees, abused accommodations, threats by travelers and lack of customer service can tarnish the reputation of destinations, accommodations, and attractions without offering local businesses a way to resolve problems directly. 

7. Regulatory Scrutiny

Governments and regulatory bodies are beginning to scrutinize the practices of OTAs more closely. It is about time they realize the ugly truth about Online Travel Agencies (OTA's) in Canada! There are concerns about consumer protection, competition, and the overall negative impact on the tourism and travel industry here in Canada. This scrutiny is leading to calls for tighter regulation to ensure a fairer playing field. However, the OTA's are big and powerful now with many lawyers at the table. It may take awhile or not happen at all. 

8. Fueling a Monopoly

As an entrepreneur and an advocate for small town tourism I despise monopolies. Nothing good comes from them. In many of my talks to communities I share how innovation and progress is non existent with monopolies in the mix. Many hate competition and use bully tactics and fear mongering to deter communities from thinking outside the box. The concentration of power in the hands of a few large OTAs creates a monopolistic environment where smaller, regional players struggle to survive. This consolidation limits consumer choice and can lead to higher prices in the long run, as competition diminishes. 

There are Two Corporations Who Own Most OTAs

Get this! Expedia and Booking Holdings,  represent 92% of the OTA market. Yup that's right, it looks like there are many but in reality there are few and they are sharing databases. For example under the Expedia umbrella are Expedia, Hotels.com, Trivago, Travelocity, Expedia Cruises, VRBO, Hotwire, Orbitz and many others. While under the Booking Holdings umbrella are Booking.com, Priceline, Agoda, Kayak, Cheapflights and others. Two corporations hiding behind different names. How does that make you feel? 

OTA's are the Bad Guys, not the Good Guys

In conclusion, OTAs are getting into trouble because of their monopolistic practices, high commissions, and lack of contribution to local marketing efforts. This situation is particularly challenging in Canada, where the tourism industry relies heavily on local businesses and small towns that are feeling the squeeze from these powerful global platforms.

The Ugly Truth About Online Travel Agencies (OTA's) in Canada

Traveler beware, Online Travel Agencies are destroying local tourism economies