doctor evil
488 days ago
 

How to love the Doctor Evil of the hotel world

NB: This is a guest article by Pedro Colaco, president and CEO of 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.

So what does all of this have to do with Booking.com, the Priceline-owned giant of the hotel sector?

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.com’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To add insult to injury, Booking.com’s flat commission model has been replaced by one of bidding for position on the first page of a destination.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. 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.

For example, Booking.com recently reserved the right to automatically resell a room that one of its customers has canceled, apparently to protect the commission.

Booking.com also changed the information policy and now blocks access to the customer’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 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:

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, it’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 guests’ 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 hotel’s brand exposure;

Conclusion

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 didn’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.

 
 
Special Nodes

About the Writer :: Special Nodes

Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.

 

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  1. Happy Hotelier

    And don’t forget how Booking Com tries to Hijack the Dot Hotels gTLD

     
  2. Timothy O'Neil-Dunne

    A great piece and one that exposes the depth of the control that PCLN now has on its channels (note plural).

    It would be interesting that there would be a complete hue and cry if this had been attempted with Airlines.

    However Airlines are indeed going the other way demanding that not only do they get the control of the customer post booking but now in the shopping process they want to identify and target a personalized offer before the sale is completed. With PCLN going to own Kayak and that channel willing to play differently with the airlines – the challenge for any intermediary will be how to manage the Purchase Path. I think there is a new world order coming to the process of fulfillment.

    Its going to be another fun ride.

    Cheers

     
 
 

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