Booking.com – why we detest this apparent necessary evil in hotel distribution

PROLOGUE

The hotel industry is huge in size, small in collective power, collaboration and ideas. As a result it is at the complete mercy of the well organised on line third party travel market, especially indiscriminate vultures like Booking.com – who plunder the hotels and the customers alike.

Firstly.  some aspects of the solution for hoteliers, as a backdrop for the problems – -(and this is certainly not a solution looking for a problem)

  • Never allow a hotel guest who booked you via a third party, to ever do that again
  • Reward him/her in the first instance with a credit of 50% of the commission you paid the OTA on the booking, against hisi/her next stay (OTA,s apart from hotels.com, have no frequent traveller reward programs)
  • Give the same guest a ‘recommend a friend’ incentive – you (hotel) are human – OTA’s like Booking.com are electronic
  • Apply a best practice e-CRM solution like Guestfolio (www.guestfolio.com) to efficiently manage the hotel<> customer relationship going forward (OTA’s like booking.com  just don’t have this
  • If the customer is on leisure, add the customer to your (if you don’t have one, create one) direct deals program
  • If the customer is on business. Incentivise his company to have a direct relationship with the hotel for all future business requirements
  • Ensure that you have an ecommerce and channel management partner (like Navarino services, Innfinite’s partner – www.navarinoservices.com) to open new direct doors to agency, corporate travel, and consortia business which bypasses the OTA’s
  • Make sure your on line services consultant (like Innfinite – www.innfinite.co.uk) understands, and implements, an online channel shift  program for you
  • Tell your financial people, or implement yourself if a small hotelier, to focus on GOPPPAR (gross operating profit per available room), not REVPAR – only the former really brings it home to you the true cost of these third party agents and merchants

You (hotelier) are in the people satisfaction and service game, OTA’s like booking.com are in the numbers game, so its actually very easy to start a serious channel shift strategy while still riding along with the OTA’s – eventually their pot will get smaller and smaller if you employ the right tactics, that’s pure common sense. Never forget that you have the customer (their customer, they say!! – ha ha) in front of you, they never do, that’s a huge strategic advantage – make the most of it!!!

 

Here at Innfinite, we have never made a secret of the fact that we detest many of the tactics employed by the on line travel companies, most notably Booking.com – and we are completely flummoxed by the hotel industry’s continual failure to address and counteract this, far less complain about it or even consider fair trading issues.  Conference after webinar after travel writer consistently eschews the whole issue, preferring to elevate such non-productive issues such as social media and other broad brush big talk to their big strategic agendas. Have a read at this http://www.hotelnewsnow.com/Articles.aspx/9126/5-challenges-facing-the-hoteliers-of-tomorrow

That is about the best case of stating the obvious I’ve read in a long time, and again we pontificate about the future without solving the present. It’s plain silly.

How many hoteliers in the UK are really the slightest bit concerned about these issues right at the minute? And it’s the moment the matters. Compare these 5 pieces of woffle with their serious concerns financial, competitive and otherwise, of the antics of ooking.com

And there’s another thing, let’s just call it the ‘gagging order’. This applies apparently whether you are a hotelier or a travel writer. I tried to post a critical comment or two about booking.com on a recent blog site and was politely told that as the content would become theirs, they were not in a position to publish if for fear of repercussions from booking.com – well SEMI-understandable i suppose, but this sort of stance is going to get the industry and all the supposed expert bloggers and writers it has bred, absolutely nowhere. But there’s something else – the threatening, bullying and downright nasty behaviour of booking.com towards hoteliers who even dare to step out of line with them, although it’s perfectly legal.  And couple that with the unilateral imposition of outrageous distribution rules such as the cancellation issue described below, without an iota of consultation with the hotel industry. Sorry booking.com, you are not the hotel industry, we hoteliers are. At Innfinite, we represent over 200 hotels as full service on line hotel consultants and implementers (doers, not talkers), and virtually to a man they have experiences some outrageous escapades with booking.com

Let me just get straight to the point, here’s by no means an exhaustive list of justifications for our point of view.

1              The numbers game – hotels are being continually urged to be more proactive in customer relationship management,  yet booking.com has as much interest in guest relationship management as fly in the air. They are interested in 3 things and 3 things only, number of hotels, amount of commissions, and profit. No more, no less. Booking.com is a monetised search engine, it’s not a serious travel company and people should stop calling it that. It plunders and robs the travel industry, and puts absolutely nothing back in, other than to protect its own interests.

2              Value added (by Booking.com to the travel experience) – well the answer is A BIG ROUND ZERO

3              Creates an imperfect market as the big brands and chains can outgun the smaller properties on budget, bidding on higher commissions to obscene levels reported of as much as 30%, and size is also used by Booking.com to its advantage, the bigger you are, the bigger they want you to fall.

4              Booking.com has a positive strategy of gazumping hotels’ own organic search positioning, and worse still, paid for search positions and ranking  by sponsored links strategies on the hotel’s own keywords, this practice is absolutely out of order, abhorrent and they should not be allowed to do this, and abuse the  hotel’s brand/brand name without the hotel’s express permission.

5              Threatening and bullying tactics bordering on the obscene are now commonplace. I hear stories from my client bas just about daily, and i know other consultants do too. They shop everywhere for the cheapest deal then insist you give them it (or better) – or else. I recently had a hotel open after a new refurb, and on the website it offered all returning guests a celebratory complimentary glass of wine on arrival – LateRooms and Booking.com spotted it and wanted their customers (and remember they are THEIR customers, not the hotels – how ludicrous is that)to get the same comp glass of wine on arrival, to which my client said – on the basis that we bill you for the wine yes, this deal is for OUR customers not yours – and we’re not taking the deal down – and they didn’t, and they were bullied consistently and had to up their allocation to booking.com or they would be suspended. This is just one example of a sea of horror stories out there, and the industry should shout these tactics and abuses from the rooftops instead of being terrified to even mention them.

6              These overpowering tactics effectively make them untouchable, they are never discussed at Lodging Conferences for example, i guess because the hotel industry is terrified about recriminations, this is a totally unacceptable situation, and i would urge the industry to convene a conference about combating the power of Booking.com and other ‘so called’ on line travel agents (which they are not) – at the earliest convenience, and make it free to attend and not these extortionate event costs  which characterise conferences which are usually much ado about absolutely nothing. – oh and invite Georges Panayotis (see the article I reproduced below) to be one of the keynote speakers.

6              Remember rate parity is not law, it’s an OTA /travel merchant’s creation for their benefit and theirs alone. Yet hotels are effectively bullied big time into never having a lower rate for the same room on their own direct sales channel on line (property website) – or they will be suspended. Then watch the Trivago ad and discover how there is absolute ZERO retail rate parity out there on merchant/agent sites, and rate differential sometimes 200% or more between the cheapest and dearest prices shown by third party sites. That smacks of profiteering and the hotel has no say whatsoever in this game – as an example (using rate parity in a nett rate situation – where an Edinburgh hotel discovered during the Edinburgh festival that Expedia was selling it a 2 x the highest high season rack rate – how a third party can destroy brand equity in one fell swoop. Wholesale rate parity is a nonsense with only one advantage – it’s easy for the hotels to manage/distribute rate across their distribution landscape, but there the advantage ends. I laugh every month at the (NON) rate parity trends produced by Rate Gain every month – this non-conformity is replicated worldwide it seems, and WORSE STILL, the number of hotels unwittingly more expensive on their own websites is a trade disaster.

Look, a hotel owns its own product or service, and is legally entitled to offer the same or a lower rate than an on line travel company – or any rate for that matter, on its own property website. And properties should not overemphasise the admin advantage of rate parity – bets practice channel management would dictate that you should be able to manage sales and distribution  channels with different rates and products of your own choosing, appropriate to that channel and their product preferences and buying behaviour – that’s what smart channel management is all about. In any case most hotels find that 90% + of their online bookings form third party sites comes from ¾ sites, so the channel management proposition is not onerous. The irony is that the smaller hotel which may need to flex its rates more to be competitive, doesn’t have the same manpower to manage channels individually.

7              Degrading rooms and services – the ludicrous situation exists where hotels downgrade customers who book via Booking.com and other on line agents and merchants, because they are often high cost low spend customers (as against e.g. regular corporate and event guests, and retention leisure) – Booking.com’s behaviour is creating a silly situation of kindergarten proportions – just read this article

http://online.wsj.com/article/SB10000872396390443768804578036451910494038.html?mod=WSJ_Hospitality_leftHeadlines

and get a flavour for the host of ‘downgradeables’ the hotels can offer – there’s ONE HUGE LOSER, THE CUSTOMER – and remember Mr Customer, Booking.com won’t tell you – BECAUSE THEY DON’T CARE ABOUT YOU

8              Tactics like the latest cancellation issue raised by Georges blow – repeated now for emphasis

“Having literally trampled the competition both in Paris and in the surrounding regions, Booking.com profits from their dominant position by imposing new rules on the game. To the surprise of its “partners”, the site now reserves the right to automatically resell a room that one of its customers has cancelled, so as not to lose commission. They block access to the customer’s bank information, so that the hotel cannot claim the forfeit for no-show. They eliminate the transmission of e-mail addresses of their customers, a ridiculous practice to avoid direct contact between the hotel and the customer. This does not characterize a relationship of trust between business partners.”

This is, in a word, outrageous. And i know, not only from my own clients, but from those worldwide of our ecommerce partners Navarino Services (www.navarioservices.com), that hotels, to a man are totally outraged. This heavy handed unilateral changing the rules of the game is abhorrent, deplorable, and needs to be resisted by the industry – but again- will it?

9              They couldn’t care less about customers, or individual hotels. They don’t profile your property at all well. The same old boring template is filled up by every hotel, whether you’re 5 star boutique or 1 star Etap. What I do give them great credit for though, is the persuasiveness of their booking process, in this respect they’re way ahead of most hotel on line booking systems. As for customers, they own the customer, and that’s as far as it goes. They take no responsibility otherwise for customer wellbeing. its a joke. and if you want an account manager for your hotel, the way to get one is to break their rules and you’ll get one in 5 min, abide by their rules and you’ll never hear a cheep from them – they couldn’t care less

10           They have no concierge – in fact they have no customer service. Absolutely none. You need to seriously consider the viability for your business of your own concierge, customer support is critical – again have a look at what e.g. Guestfolio (www.guestfolio.com) can do for you, the payback period in terms of commissions saved could be very short indeed. YOU MUST HAVE PRE-STAY CONCIERGE.

11           Frequent traveller/loyalty rewards – Booking.com have none – well hotels.com have a free night per 10 booked, no matter where, pity help you if you’re then 11th hotel! (OK they will have factored that in somehow I guess). The secret is – don’t join such stupid initiatives – if you have to, you’ve failed to implement the solutions we’ve already suggested.

12           Customisation of booking/personal requirements – what if you and your [partner want room 15 on the first floor with the 4 posted and the loch view , and a bottle of champagne on arrival- – – from Booking .com? – forget it!

13           Knowing the customer –   if a hotel gets a booking from booking.com – they don’t know whether the purpose of the visit is business, leisure, anything – remember a fundamental plank of the OTA strategy is to ensure you know as little about the customer as possible – remember it’s their customer??? (heard that before somewhere) > then they deliver no customer support – —

14         Inventory risk – they take absolutely none. They want room allocations yet you the hotelier take the fully inventory risk and are left with the unsold rooms, often on a ridiculously short release period.. And do watch, like all so called ‘travel agents’ they’ll try to sell outwith allocation especially at peak times, protecting their allocation as far as possible, making it a real double dunt for you the hotelier.

This last point exemplifies the new order in the UK where the primary producer is often left with the least reward, and is yet the most critical person in the supply chain. Farmers have found this to their cost with the power of the supermarkets almost squeezing some right out of business. But at least the supermarket is left with the unsold meat, (and the loss/cost) –  the on line merchant in hotel distribution is not left with the unsold room, and it actually more perishable than a pint of milk!!!

And, do you know what – all the negatives we have outlined above have a cost associated with them, a cost to your business, both financially and in terms of guest satisfaction. And this is over and above the 30% + rates of commission we hear some hotels pay, no wonder they’re laying down the rule in /8 above. it also goes without saying that at 30% commission, this makes GDS look cheap (especially true where your destination has decent GDS business/business potential) – and GDS doesn’t suffer from all the same hang ups and drawbacks and costs too – as Booking.com &c

 

NOW – Here is Georges’ article in full, a must read for all hoteliers. It’s actually a lot tamer than some of the above – – –

“The relationship between online reservation agencies and hoteliers has already evolved to a tense partnership, and is now entering to a new phase of confrontation. The trade war among online agencies has developed practices near piracy. Addicted over the years at online bookings, hoteliers are now paying at high price, the ease in which they fell behind. And news from the front is not good!

Having literally trampled the competition both in Paris and in the surrounding regions, Booking.com profits from their dominant position by imposing new rules on the game. To the surprise of its “partners”, the site now reserves the right to automatically resell a room that one of its customers has cancelled, so as not to lose commission. They block access to the customer’s bank information, so that the hotel cannot claim the forfeit for no-show. They eliminate the transmission of e-mail addresses of their customers, a ridiculous practice to avoid direct contact between the hotel and the customer. This does not characterize a relationship of trust between business partners.

By hiding their customers under a virtual burka, Booking unveil their true face, more of a predator than a partner. But beware, all these practices are also indicative of the fear that its model might be undermined by technological change or the sound response of customers and hoteliers. The most hastily built walls are not the strongest. Giants with feet of clay, Booking, and those who follow their ways, have everything to fear from the will of Google or Apple to tread on its land. The e-commerce T-Rex sharpens their teeth to feed on those who interfere. No one can really predict the outcome of the fight. An opaque veil will eventually tear for the client to question the added value of a service provider that offers, in the end, the same rate as the brand website. Hoteliers can say thank you to the Best Available Rate, as long as they retain control. There are fights that should not be undertaken: after having reconquered the right to set their prices, they must regain full control of their inventory, preventing an online agency from coming to dig in the PMS without being invited.

And no doubt, Booking, Expedia, Agoda, Trivago and others do not expect a response as powerful as from the hotel groups who realize that both marketing and distribution engines were essential to run the operations. By investing heavily in brands, sales tools, and communication, they restore meaning to the customer relationship. They implement neutral tools that allow them to restore the direct link without having to compromise with community sites. Distribution is one of the major challenges in the hospitality industry that lost profitability, having transferred a portion of its sales force to greedy partners. The recent actions of Booking should open their eyes and raise a welcoming insurrection among hoteliers. They missed the first steps of the Internet and had to run behind the pioneers to catch up. Now hoteliers must not miss the opportunities of mobile tools and smart partnerships with new actors. Coupled with the revaluation of brands, new distribution channel will enhance the interest of the franchise. And I bet in this field, the hoteliers have all the chances to win the fight.”

 

Epilogue – (we hid this at the end in case they might read it!!!) – calling Booking.com and other OTA’s and merchants – message from Innfinite – WE WERE HOTELIERS ONCE, WE REMEMBER YOU, WE KNOW WHAT YOU GET UP TO – WE WELCOME YOU TO CHALLENGE ANYTHING WE HAVE SAID ABOVE.

 

Please email us at robert@innfinite.co.uk

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