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hi i'm andrei cibatrov travel technology competence lead at altec soft and today i'll answer six of the most common questions about starting an online travel agency let's get to it how to start an online travel agency to start your ota you have to do a number of things prior to anything else look around and ask yourself if the rainy pandemic currently going on like black death or spanish flu or code 19 ok jokes aside first you have to understand what you want to sell and who you want to sell it to who is the target audience what products do you want to sell them in other words you have to define your niche without it you'll have yet another travel agency destined to failure because it's really unlikely that you'll amaze enough people with some exceptional ux prices or anything else for that matter once you have your niche and products you have to go to a number of suppliers and figure out which inventory you have access to how much it's going to cost and what the commissions are eventually you need to kind of make up the basis for your unit economics calculate the viability of the whole endeavor as you explore suppliers define your financials who is going to be a merchant of record how are commissions going to work also you have to calculate indirect costs like payment gateway fees and acquiring bank fees because this can be a heavy hit on unit economics third you need travel agents even a fully online business needs people who are going to do some things manually talk to suppliers help trailers if something goes wrong you get the idea fourth organize your own tech platform a booking engine integrated with the suppliers that we have just discussed and of course there must be an interface for end users like your website where travelers can find your products and process their reservations you'll have to decide how you're going to manage that your business rules your bookings how you're going to organize first line and post booking support maybe you should consider white label solutions though that already have their contracts with inventory providers you just slap your logo onto it make some tweaks and launch it doesn't cost much but it's going to have some limitations in terms of business logic and features you can also use some switch or booking api and build your own interface on top of that with your own business logic but if you need changes in this product you'll have to ask your provider for help or you'll have to jerry build your own business logic on top but it can complicate the architecture and of course you can go with fully custom solutions which is what our company does this option will allow for great flexibility you can decide on product that you want to offer unique business logic supplier management dynamic pricing analytics you name it and the final point which is often underestimated is your customer acquisition strategy how is the world going to know that they can book with you you have to dedicate a budget for that and choose among lots of different channels like digital marketing partnerships offline marketing engaging with bloggers content making but there are simpler options for instance you can negotiate with meta search engines and pay them fee for driving traffic to your website but you must have competitive prices to be visible there anyway customer acquisition should always be top of mind the second question is what is a booking engine a booking engine is the core of any automated booking of travel products whether an ota dmc or airline first of all this is the system that interacts with suppliers it gets availability rates and allows for search ing to set parameters and this model is capable of booking that means it can send special booking requests to airlines in hotels generate pnr's and process ticketing another booking engine function is a payment gateway i would edit here because you can't complete a booking without a payment so you have to hook up a payment gateway to your booking engine to either collect data and send it to suppliers or charge clients on your own and calculate it in your system now the booking engine works with some interface for humans this can be a travel agency back office or a btc website a mobile app voice assistance you name it you can integrate any user interface with it there are different booking engines depending on who's using it for instance online travel agencies may have such features as dynamic packaging if they sell package tours hotels or airlines would have booking engines that are directly integrated with their own inventory vacation rental companies may use engines that are integrated with property management systems or extranet for owners to list and manage their properties what are travel agency back office procedures this is a tricky question depending on the travel agency the procedures and features of back office software may differ so i'll try to give a general answer to that question in essence the back office manages travel agency operations since we are dealing with an online travel agency within some kind of admin panel to manage your suppliers and commissions access bookings work with crm and marketing tools first revenue management it actually means controlling your commissions and prices depending on the number of parameters you can choose how you apply commissions to one or another supplier or if you have fixed commissions this whole revenue management feature isn't necessary another part of a back office is designed for travel agents it's usually called booking management a booking management service gathers information on all booking across all clients and then it allows agents to access any book and record help a traveler to make changes and contact suppliers via back office or other channels you may also find a crm that contains the list of all clients the history of all their bookings loyalty points and so on another part of a back office is marketing tools management for instance you can have coupons discounts sales that impact prices or help retarget customers and finally there may be tools for analytics and bi team and also there could be a model for sea level management to let them see high level reports and do a health check of the entire business how do online travel agents make money and what are the main revenue streams for starters travel agents receive commissions for every purchase ticket or booked room this may be a fixed commission negotiated with a supplier or you may control it on your own depending on the competition second you can receive bonuses in a nutshell if you have direct deals with hotels you can negotiate at some target sales volume or flown revenue with airlines say for a year and if you reach those targets you can get negotiated percentage at a ballpark of three percent of the annual booking amounts this is also a considerable part of the travel agency revenue not surprisingly if you have large volumes you can negotiate more beneficial conditions with your suppliers including gdss to spend less on their fees then you earn money on extra services you may have some concierge service or protected virtual interlining you can also earn up selling extra products like choosing airplane seats adding a baggage transfer or insurance insurance by the way is quite profitable any kinds of services that go together with the main product you sell and there may be some cases when you sell the main product at a loss or just break even but make money on the extras another way to earn money is negotiating with payment providers for instance if you work with some bank and again reach some sales volumes you can get bonuses returning one or two percent of all transactions processed by a bank but this option is more likely to work for larger odas and finally there are otas that work as membership clubs so travelers have to pay fees every month or a year to get access to the system unique prices or products eventually your business model may be built around this monthly or annual subscription fees how do i find suppliers suppliers are among the most important components of your business the right suppliers will help you to sell unique products make money on commissions and do business the run suppliers well they won't let you do that there are plenty of places you can go to get inventory it all boils down to your business model and your circumstances i would say that there are three main groups or level of suppliers if you are just starting an ota most likely you won't try to directly negotiate with airlines or hotels you can try finding some white label products with booking engines and pre-integrated suppliers these products have some negotiated deals out of the box they'll have extra commissions fewer opportunities to make money and less flexibility but it would be a fast solution and a good proof of concept and you have to determine whether this inventory and these prices are enough in your demographics and segment the larger you get the more suppliers you need so the second group is resellers and wholesalers this would be bad banks if we talk about hotels and consolidators when it comes to air travel wholesalers purchase inventory bulk from and suppliers and resell it for commission usually they have good deals but you have to split commission with them the third option is direct suppliers like hotels where they are channel managers or pmss or airlines and their direct connections such as ndc this is the hardest but the most advanced option you have to negotiate commissions and deals directly with carriers in hotel chains you can connect with end suppliers using their technology or via gds's eventually you'll have to look at the whole spectrum and decide on the solutions that fit you that's why it's really important to talk to as many companies as possible to compare prices services everything that goes into working with them and then make a decision how do i acquire clients it's crucial to understand your niche agencies may be very different but being yet another travel agency that sells same flights same hotels and tours as expedia or booking.com you'll have a harder time with customer acquisition why you don't have a unique audience unique products you have nothing unique at all you'll have to pay for adwords fight for positions at meta search engines and hope that you'll get returned customers it's worth mentioning that great service and great prices are the reasons for your clients to return and this is another crucial thing for a common ota it's hard to make money by just acquiring customers via adverts ads are extremely expensive because of the fierce competition that is why you must develop and grow your client base and you can do that not only by having great prices great ux or some sophisticated features but also by loyalty programs and partnerships so this is a dual task first you have to acquire and then find a way to re-engage your customers these are big concerns of a generic ota if you have an issue ota it all depends on your niche say you have a luxury segment then you would seek placement in some premium magazines or you may need consumer service to handle special requests in other words you must be where your customers are and make sure that their expectations are met for example one of the travel agencies that we work with sells travel products together with tickets to events so their main customer acquisition strategy is promoting and selling tickets and as a valuated service upselling travel products so it's something between an ota and ticketing agency if you work with healthcare tourism it's going to have completely different channels and messages than extreme tourism so there are two ways the generic way that requires winning your clients with exceptional service and great prices and the niche way that requires you to be where your clients are that's it for today thank you for watching leave your questions in the comment section below and see you next time you