For Hotels, There’s No Room Left for Online Travel Agencies

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Major hotel chains are engaging in an online turf war with the very travel sites that have helped drive their businesses.

Marriott International Inc., Hilton Worldwide Holdings Inc. and InterContinental Hotels Group are using extensive marketing campaigns to claw back business from Expedia Inc., Priceline Group Inc. and other travel-booking sites, which steer customers to hotel properties but also take commissions of up to 30% for each reservation. The chains are starting to treat these sites less as valuable business partners and more as gatekeepers standing between them and their customers.

Many large hotel brands are offering lower nightly rates and other perks to loyalty members who book directly through their sites instead of online travel agencies.

https://www.foxbusiness.com/features/for-hotels-theres-no-room-left-for-online-travel-agencies

 

I feel compelled to respond since I am on both sides of the hotel business.. I own a tiny hotel in the Luberon and I also fly about 50k miles per year (staying in hotels along the way.)
Booking.com has been amazing for us. They take 15% but it is completely worth it. We don't have "a name" nor do I have time to invest in the relentless SEO content marketing necessary to differentiate us when people search "hotels in the Luberon" or "Provence hotels." Since we are a very small place (just 3 suites,) it's an unprofitable use of my time to be generating blog content and engage in full-court-press inbound techniques -- so unless you are a chain or happen to be featured by travel writers, good luck being discovered via inbound searches.

We do have a website and a good direct booking system, but we probably get 3 bookings per year directly from our website yet between Booking.com and cross-listing on AirBnB, we are completely booked through most of the season. Our booking software is integrated with Booking.com and AirBnB so we are able to have all of our channels coordinated with a minimum of work. If one considers Booking.com as a lead-generation system, 15% is a huge value. I would easily spend far more if I were marketing directly through ads. Our TripAdvisor page is free -- we haven't paid the yearly €799 fee for an enhanced listing but TripAdvisor still is great for us since we have 4.5 stars.

Guests from Booking.com are far less work than from AirBnB or direct. AirBnB customers seem to still not understand what Instant Booking means -- we get almost daily inquiries of "do you have availability for some date" -- yes, obviously that's why you are able to instant book! AirBnB guests tend to want to have long conversations while Booking.com people just book and show up with a minimum of fuss. We also have a very liberal cancellation policy, unlike many places in the region -- we found that just letting people cancel whenever they want works out fine in the long term because are area is high demand so cancellations don't really cost us anything because we quickly get rebooked during peak season. So everyone is happy. In terms of taxes -- our prices have all of that included.

My point is that sites like Booking.com and AirBnB have made our business -- we essentially incur no marketing costs. So we love Booking.com! It honestly doesn't matter one bit of you book directly with us or via Booking/AirBnB -- our prices take our costs into account so you aren't "hurting" us if you book through a third party. We are just glad to welcome any guests however they find us. The big chains probably get hurt the most by third party booking sites because they are already spending money on marketing and have name recognition, where for ultra-small-timers like us, you probably would never have heard of us without those third party sites.

The short version: third party sites add huge value to our business -- they get to do the hard work of marketing us while we can focus on the guest experience.

Booking.com is indeed nice, however, the cut they take is quite substantial (in my country it is 18% including taxes) and I believe there is a lot of room for competition. I see bookings from Airbnb being on the rise. What Airbnb charges me is peanuts compared to Booking.com. Perhaps a Hotel might benefit from the marketing but for me that's not the case as most of our customers are climbers who come to climb in Osp and they book whatever is available next weekend. Also what I don't like about Booking.com is that I can either accept cash in person as payment or accept credit cards through them but not both. I absolutely have to accept cash but why do I have to completely give up the safety net of credit cards and being able to charge no-show penalties.
What software do you use to sync Booking.com and Airbnb bookings calendars? I was using http://www.sync.rentals/ but they seem to have reliability issues (or maybe websites don't like them). Anyways I would love not having to write my own tool for this task and it would save me a lot of time.

Business opportunity for someone?

Yes! 15% for marketing, payment and secure booking is not expensive. It is actually very cheap.
And for us consumers services like hotels.com are really a great help, makes bookings fast and constistent. And they are secure; making me not worry about booking a hotel in an unfamiliar country.

The 15% seems fair. I'm not that familiar with the travel industry, how much more is that percentage compared to the commissions paid to traditional travel agencies pre-internet age? There were always,or at least very often, middlemen involved in the travel industry. Is the cut that for example Booking.com takes really that much bigger than travel agents used to take in the eighties?

If hotel chains were managed by sensible, tech-aware people, they wouldn't bother with these expensive, rearguard marketing campaigns. Instead, they'd get together and form an industry working group, and design simple, standard data formats and querying/booking APIs, and then make all their data available through them.
This would make it far easier to build a hotel search engine, which would cause an explosion of competition and innovation in this area. This in turn would undercut the power of the leading agencies, and drive down referral pricing.

But they won't do this. You see the same problem in so many industries. Vendors act like data about their offering is more precious than the offering itself. They make it as hard as possible to build an aggregator, so the aggregation market gets tied up by a tiny handful of players who are willing to invest enough to build a scraping infrastructure. Then they panic that these aggregators have too much gatekeeping power, but rather than encouraging greater competition amongst aggregators, they respond by trying to put the genie back in the bottle.

I completely agree. To those pointing out the Sabre/Amadeus "debacle", a few benefits as a reminder:
* To innovate, the GDS only think about how the messaging should be differently handled.

* To buy a ticket, an airline/travel agent uses almost the same syntax throughout the world (this is a miracle, when you can't even order cabs in the same manner in the world).

* Airline companies implement similar interfaces (between different GDS) to handle ticket processing. Which is another miracle: think freight handling done with the same messaging protocol.

Now add to the mix modern protocols and you get nice APIs. The hotels CAN be the only one properly consuming the APIs (w/ gorgeous and easy to use platforms), but if they can't do it well, let tech-aware organisations do it.

Instead, these hotels are fighting for breadcrumbs and insulting companies which have done more to facilitate accomodation than any other hotel in the past 40 years.

I no longer travel frequently for business, but when I was a consultant I was constantly traveling around the US and staying in various hotels. I would say that to a large extent, I always saw them as just commodities. I only had one or two pet issues that occasionally cropped up, but 99% of the time I didn't care a lick about the "brand" of the hotel, nor did I want to.
Maybe it's different for recreational travelers, but for at least one business traveler my hotel room was just a place to park my clothes and stuff during the day, and to sleep at night. As long as the AC worked, and the bed was anything close to reasonable, the rest was moot.

There are many hotel search engines out there already, and I don't really understand why new search engines would pick up meaningful market share. The priceline and expedia web properties (Booking.com, priceline.com, KAYAK, Expedia.com, Hotels.com, Hotwire, Travelocity, trivago, etc.) have pretty decent customer loyalty, a lot of app downloads, and highly optimized customer acquisition and conversion.

Many hotels have contracts which ensure they can't undercut 3rd party resellers. The trick we used back in the day was to offer the same price on the hotel website while bundling in a bunch of freebees such as wine/dinner etc.

Exactly this. Working at a brand name travel aggregator (sadly now just a brand of someone else) this was always the gotcha for the hotel chain. We get a deal on your certain count of rooms and you can't undercut our price for the same class of rooms. In exchange for 15-30% we send you business. There are kinds of deals possible including us buying rooms from you and then reselling them ourselves (too risky really) or agreeing to buy inventory you haven't sold for today. I don't know the ins and outs of each type of deal, but for smaller hotels its great, for bigger chains its a pain, and for bigger chains with aggressive managers of certain hotels who ignore corporate rules, a tricky gambling act. In the end the price is too high for big chains, but the ease for consumers to compare is great. Same problem with airlines somewhat, they don't want aggregators but the general public wants to compare prices, and to accommodate them the airlines cheat on pricing (low ball the aggregate price and then charge for all sorts of stuff later - i.e. Spirit). With airlines its much harder to compare prices then with hotel rooms.

It has become ridiculous with these booking sites. When you google a small hotel, often the first many results are hotels.com, bookings.com, tripadvisor.com etc. and the hotel itself is down to spot 3, 4, 5 or even lower.
There is a place for the booking sites, especially for exploring several hotels at a time. And they do offer some reviews and comparisons that can be useful. Sometimes, they also offer the cheapest price but usually it is just as cheap to call the hotel itself or book through its website. And it really feels good to pay the hotel that offers the services, instead of some tech company in the US.

I used to work a part time job doing hotel reservations for a small hotel a few years ago. Back then about 35-40% of their bookings were made through booking.com, and although I didn't know the actual cut booking.com took, I know it wasn't small. The hotel was always keen on trying to convert their booking.com or other third party customers into direct customers.
We were always instructed, depending upon predicted or actual demand of course (we had someone dedicated to trying to predict demand by populating a spreadsheet with prices), to be willing to haggle with someone that is dealing directly with the hotel if we felt it necessary to sell. I would always recommend that you deal directly with the hotel, especially if you think demand is low. Also, showing up just before the hotel reception closes and swaps to the night shift porters is a great time (10-11pm) as hotel staff are particularly vulnerable to haggling. At that time of night we just want to sell for covering staff wages/fixed costs.

Downside of showing up at the last minute is you can easily be ignorant of local market conditions and show up at 10pm when every bed in the area is occupied due to some local event that you were ignorant of.

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