May 20, 2011

Getting too many bookings from Booking.com?


Many hotel managers in Europe are worried about their excessive dependence on the high percentage of reservations that they get through Booking.com, while their official hotel website is unable to produce the same good results.

Booking.com has grown spectacularly in the past few years. They have carried out an excellent work, they have a fantastic website in relation to customer experience; they have created a huge affiliate network and a ubiquitous presence on the internet that has given them an enviable position in Europe.

As a consequence of its growth, many hotel managers - especially in Europe - feel not just a great satisfaction for the increased sales, but they are also starting to resent some of the aspects of Booking.com and their relation with it:

1. Excessive dependence on just one provider.
The hotel managers’ traditional wisdom says it all “Do not put all your eggs in one basket”. I would add: “…especially if that basket isn’t yours”. I think that the direct online sales channel is an exception to diversification: As the ideal long term target, it should try to get limitless growth, to the expense of the middleman.

2. High costs
Booking.com isn’t cheap for the hotel, especially the contracts that provide more sales volume and more visibility. You could argue that there are other middlemen who are as costly or more than Booking.com, but there are also others that are better value for money, especially: direct online sales.

3. Increasingly higher pressure on the hotel to make its conditions stricter.
Commissions that keep increasing every year, a maximum amount set for some contracts…This year they are focusing for the first time on hotels that do not apply a strict parity pricing policy with the hotel webpage. This, although, legal if it’s in the contract, had not been required by many companies up to now…

Booking.com has on its site 648 hotels in Barcelona and 526 in Madrid. That is to say, all of them, and they can be checked by any user. They don’t have a lot of space for growth, at least in the big Spanish cities. They could try to grow by making their conditions for hotels harder and harder to fulfil?

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