Last week The Priceline Group Inc, mother company of Booking.com published its full-year 2015 financial results, a whopping $55.5 billion of revenue, which is an increase of 10% compared to 2014. This results in an increase of the gross profit with 13% to $8.6 billion.
During the conference call that followed, the CEO of the company told his audience that “he isn’t happy that some hotel chains are making a major push for direct bookings and offering loyalty program members lower rates than they give to online travel agencies”. If I would be the CEO I wouldn’t be happy either, those chains represent to 15% of the total revenue of the company.
Show me the money!
In December 2015 Booking.com was in the news as well, this time because they threatened their “clients” (hotels) with legal actions. This was because hotels are making use of a rate parity tool called TripTease. Why the legal actions? Obviously! Because it hurts the revenue of Booking.com.
TripTease allows hotels to display the rates of three OTA’s alongside the hotel’s own rate on the brand homepage. This results in a 35% increase in direct bookings according to TripTease. If I were to be a hotelier I would embrace TripTease immediately as it would save me thousands of euro’s in commission.
But why would Booking.com threat with these legal actions besides the loss of commission? I recon because the company has a ‘bidding program’ that allows hotels to improve their ranking in the results. Booking.com says that the current ranking is based on consumer interest and the fact that they have “standard” and “preferred” hotels. If one hotel meets a number of criteria they can become a preferred hotel. The commission percentage increases, but then your bookings can be doubled as stated by Booking.com.
Now, if you as a hotel, offer a higher commission your ranking increases. Just imagine that you’re a new hotel with no reviews yet…you must pay a crazy high percentage just in order to be anywhere worthwhile in the ranking.
Extra, not structural
Interesting to notice is that apparently over 20% of all bookings made through Booking.com are business travellers and that very few travellers stay at the same hotel twice… Even so, according to Booking,com, every business coming through them is just “extra” business and not on a structural basis.
In my last blog I spoke about loyalty and what a hotel would do for you if you are a frequent stayer. Apparently you’ll no longer only receive your favourite newspaper, free upgrade and goodies but also a discount if you book directly.
I find it strange that when you’re using a platform to generate “extra” business you can receive legal threats because you are trying to sell your last rooms. We at Hospitables believe in cooperation. Why would we forbid you to hire the best, or sell your last room, if that person comes walking through the front door? All we can do is offer you the best service, the best branding possibilities and listen to your remarks or suggestions and improve our services.
Loyalty pays off
Hospitables is not just for us, it’s for, by and with the industry. And that means that we provide you with the best way to present and brand yourself as employer and help you attract the best and most talented professionals. Because of this we’ll also give our partners from the industry a share of the profit. Now, that’s a good payoff isn’t it?
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