Booking.com: Your Worst Best Friend?

In recent years, many European tour operators have booked entire hotels, filling them with guests traveling on the operators’ planes. Hoteliers loved this model. While the price was low, occupation was guaranteed and often paid upfront.

However, when service degraded or competition increased, tour operators would book other hotels. Hoteliers relying solely on a few tour operators struggled to establish new channels. Some failed and went out of business. So, what does all of this have to do with Booking.com?

Booking.com’s Success for Independent Hotels

Booking.com has taken Europe by storm. It is now making inroads into the US. Studies show that over 50% of all hotel nights booked in Europe are through Booking.com. This level of market consolidation has been a boon for independent hotels. Without any brand recognition, Booking.com has become the ideal digital marketplace to promote and sell their rooms to guests from all over the world.

Booking.com has created a formidable marketplace with a large amount of inventory. Many consumers believe that “all hotels are on Booking.com, at least all that matter.” It does not take payments upfront. From our experience with hoteliers, Booking.com certainly has significant distribution power. There is no doubt that it represents an increasingly significant portion of the income of numerous hotels worldwide.

Booking.com’s Obsession with Price

Booking.com is obsessed with providing the best possible prices to consumers. J.D. Power and Associates reported that Booking.com has the highest customer satisfaction rate of independent travel websites, mainly due to competitive pricing. This obsession with price causes a love-hate relationship between hoteliers and Booking.com. Hoteliers love the reservations Booking.com brings in, but they hate selling at low prices, which prevents them from differentiating their hotels on any other factor.

To add insult to injury, Booking.com’s flat commission model has been replaced by a bidding system for position on the first page of a destination. It is not infrequent for hotels to pay over 20% in commission to be on the first page of recommended properties in their city. These issues and Booking.com’s market power make the relationship between Booking.com and hotels uneven. Hotels might receive significant revenue from reservations made through the site, but if they depend on Booking.com for reservations, they have little bargaining power.

The Playing Field is Tilted

Booking.com has recently started making one-sided decisions on how their system operates, 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, blocking access to customer information, such as eliminating customers’ email addresses, 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 they can do about it.

In a recent debate at the Phocuswright Conference, hoteliers divided channels between good channels (those that extend reach or create new markets) and bad channels (those that cannibalize their natural markets, e.g., by bidding on their keywords, e.g., Hotel XYZ). With Booking.com taking all these steps, how can hoteliers trust that Booking.com has their best interest in mind and is not their worst best friend?

Balance Your Booking.com Presence through Hotel Digital Marketing

Hotels need to understand how to use Booking.com for their benefit without being overly dependent on it. They need 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 a digital presence. Achieving such an online presence includes several factors:

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 a positive feel for the hotel to potential clients.

Multi-Channel Reservations

It is vital to diversify channels and ensure that your hotel is present in at least 5-10 mass channels, including Expedia/Hotels.com, Lastminute.com, and Hotels.de. Also, consider channels most relevant to your segment. 

Optimize for Mobile Devices

Last-minute hotel bookings are increasingly made on mobile devices. Your hotel needs a mobile-optimized website and booking engine to capture these reservations. Ensure your booking engine is also optimized for mobile devices.

Collecting Guest Information

Collect your guests’ data to target the right profiles with your promotions and reward the best guests with campaigns that encourage loyalty.

Presence on Social Platforms

A beautiful page on major social networks can significantly increase a hotel’s brand exposure.

Conclusion

No hotelier wishes to have their hotel completely booked this year only to find themselves empty and helpless next year because their reservations only came from one channel and they didn’t have any other channels established. Hotels need to have a multi-channel digital marketing strategy to avoid any kind of dependence on any one service for their online revenue. They need a digital presence that safeguards them from other companies having power over them. This strategy guarantees that they are sought out by potential clients, no matter what search engine they use.