I Want to Break Free, from BOOKING.COM
A long time ago
Tour operators would book entire hotels to fill up with guests that would travel on the tour operator’s planes. Hoteliers used to like this model, because while price was low, occupation was guaranteed and often paid upfront. As competition increased, Tour Operators would book other hotels. Hoteliers that relied on a few Tour Operators would struggle establish new channels, or fail. But what does all of this have to do with Booking.com?
Is Booking.com a good friend?
Some statistics say that over 50% of all hotel nights booked in Europe are booked through booking.com. It doesn’t matter if that number is true or not, even if it was 30% it would be A LOT. This level of market consolidation has been too good to be true. Hoteliers didn’t have to care about time or money to be on the Internet, Booking does the job, and they just had to sit back and wait. So booking.com has become the ideal digital marketplace to promote and sell their rooms to guests from all over the World. Many consumers consider that “all hotels are on booking.com, at least all that matter” and booking.com’s increased focus on user reviews provides a one-stop-shop for consumers.
Booking.com claims to be the number one
Being the number one means that you are indispensable. From our experience with hoteliers, booking.com certainly has significant distribution power, and there is no doubt that it represents an increasingly significant portion of the income of numerous hotels throughout the World.
But Nothing is free, and sometimes it hurts
Some statistics reported that Booking.com has the highest customer satisfaction rate of independent travel websites, mainly due to competitiveness of pricing. This obsession with price causes the relationship that hoteliers have with booking.com to frequently be one of love-hate. They love the reservations that Booking.com brings in, but they hate it when they have to sell for low prices, preventing them from differentiating their hotel on any other factor.
To add insult to injury, Booking.com’s flat commission model has been replaced by one of bidding for position on the first page of a destination. It is not infrequent that hotels pay over 20% in commission to be on the first page of the recommended properties in their city.
These issues and Booking.com’s market power, make its relationship with hotels uneven.
The market now smells really bad
Booking.com recently started taking one-sided decisions on how their system operates and forcing hotels to adapt. For example, booking.com recently reserved the right to automatically resell a room that one of its customers has canceled, apparently to protect their commission. Booking.com also changed their information policy and now blocks access to the customer’s information, e.g. by eliminating customers’ e-mail addresses apparently to prevent direct contact between hotels and customers.
Even appreciating all the revenue they get from Booking.com, most hotels’ situation may be so precarious that if Booking.com were to raise its commission margins there is little that they can do about it.
Balancing all online channels is the key
Hotels need to understand how to use Booking.com for their benefit, but not be overly dependent on it. They need to understand how to keep the reservation service at arm’s length by having a sound hotel digital marketing strategy. It’s important to have a multi-channel digital marketing strategy that gives hotels digital presence. Achieving such online presence would include, among other factors:
- Presence on social platforms: a beautiful page on the major social networks can go a long way to increase an hotel’s brand exposure, because people talk on social networks as much as in real life, maybe more and faster.
- Multi-channel reservations: it is vital to diversify channels, and ensure that your hotel is present in at least 5-10 mass channels, not only booking.com (examples: Expedia/Hotels.com, lastminute.com, ecc…)
- Optimize for mobile devices: smartphones are the fastest growing market in hotel bookings, especially last-minute reservations. With the increase of reservations by mobile devices, your hotel needs to have a website and booking engine optimized for mobile devices.
- Collecting guest information: it’s very important to target the right profiles with your promotions and reward the best guests with campaigns that encourage loyalty.
- Great looking website: last but not least, many studies show that a large majority of consumers would prefer to book directly with the property given the same terms and conditions. It’s important to have at least a good looking website that conveys to potential clients a positive feel for the hotel.
Only a crack-brained manager wishes to have his hotel completely booked this year if they are to find themselves empty and helpless next year, but it may happen if reservations only came from one channel and they didn’t have any other channels established.
Hotels need to have a solid multi channel web marketing strategy, so as to avoid any kind of dependence on any one service for their online revenue. They need to have a digital presence that safeguards them from other companies having power over them. One that guarantees that they are sought out by potential clients no matter on what search engine these are conducting the search.