NB:Â This is a guest article by Pedro Colaco, president and CEO ofÂ GuestCentric.
In previous years, European tour operators would book entire hotels so they could accommodate the passengers on their planes.
Hoteliers loved this model, because while price was low, occupation was guaranteed and often paid upfront.
However, as service levels changed and competition increased, operators would book other hotels. Hoteliers that relied solely on a few operators would struggle to establish new channels, or fail and go out of business.
As we all know, Booking.com took Europe by storm, and is now making inroads into the US. Some studies show that over 50% of all hotel nights booked on online travel agencies in Europe go through Booking.com.
This level of market consolidation has been a bonanza for independent hotels. Without any brand recognition, Booking.com has become the ideal digital marketplace to promote and sell rooms to guests from all over the world.
Booking.com has been able to create a formidable marketplace with a large amount of inventory (many consumers consider “all hotels are on Booking.com, or at least all that matter”), it does not take payments upfront, and Booking.comâ€™s increased focus on user reviews provides a one-stop-shop for consumers.
It claims to be the number one online hotel reservation service in the world. 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.
The infatuation with price
Booking.com is obsessed with providing the best possible prices to consumers. J D Power & Associates says Booking.com has the highest customer satisfaction rate of independent travel websites, mainly due to its price competitiveness.
This obsession with price causes the relationship that hoteliers have with Booking.com to frequently be one of, well, love-hate.
Property owners 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To add insult to injury, Booking.comâ€™s flat commission model has been replaced by one of bidding for position on the first page of a destination.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.comâ€™s market power, make its relationship with hotels uneven. Hotels might be receiving significant revenue from the reservations that are made through the site, but if they depend on Booking.com for their reservations, they have little bargaining power.
The playing field is tilted
Booking.com recently started taking one-sided decisions on how its system operates and forcing hotels to adapt.
Booking.com also changed the information policy and now blocks access to the customerâ€™s information – eg. by eliminating a customer’s email address, apparently to prevent direct contact between hotels and customers.
Even enjoying the revenue they get from Booking.com, hotels would be in a precarious situation if Booking.com were to raise its commission margins. In fact, there is little hoteliers can now do about it.
In a debate at the recent Phocuswright Conference in the US, hoteliers divided channels between good channels (the ones that extend reach or create new markets) and bad channels (the ones that cannibalize their natural markets – eg. by bidding on their keywords).
With Booking.com all over these steps, how can hoteliers trust that Booking.com has their best interests at heart and is not, after all, Doctor Evil?
Balance your Booking.com presence through hotel digital marketing
Hotels need 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 armâ€™s length by having a sound hotel digital marketing strategy.
Itâ€™s important to have a multi-channel digital marketing strategy that gives hotels digital presence. Achieving such online presence would include, among other factors:
1. Great looking website
Many studies show that a large majority of consumers would prefer to book directly with the property given the same terms and conditions. To instill consumers with the trust to book, itâ€™s important to have a stunning website that conveys to potential clients a positive feel for the hotel.
2. Multi-channel reservations
It is vital to diversify channels, and ensure that your hotel is present in at least five to ten mass channels, including Expedia/Hotels.com, Lastminute.com, Hotels.de and others that may be relevant to your segment (eg. if you have a boutique hotel, try and get listed on Splendia, Tablethotels, MrandMrsSmith etc).
3. Optimize for mobile devices
Mobile is the fastest growing channel 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;
4. Collecting guest information
Collecting your guestsâ€™ data so as to target the right profiles with your promotions and reward the best guests with campaigns that encourage loyalty;
5. Presence on social platforms
A beautiful page on the major social networks can go a long way to increase an hotelâ€™s brand exposure;
No sensible hotelier wishes to have their hotel completely booked this year if they are to find themselves empty and helpless next year, because their reservations only came from one channel and they didnâ€™t have a strategy for others.
Hotels need to have a multi-channel, digital marketing strategy, so as to avoid any kind of dependence on any one service for online revenue.
They also need to have a digital presence that safeguards them from other companies having too much power over them, one that guarantees that they are sought out by potential clients no matter on what search engine they use for search.
Keep your friends close, but your enemies even closer.
NB: This is a guest article by Pedro Colaco, president and CEO of GuestCentric.