Why hotels must be wary of Booking com

First of all, we have to make it clear that if used correctly, Booking.com can be a huge part of hotels online business – there’s no disputing that. It can bring in huge numbers of bookings, and can really help to grow your hotels reach, particularly in markets where you may have otherwise struggled. That being said, you need to ensure that you’re really careful exactly how you work with this OTA, and most importantly don’t be afraid of making them work for their money. There are several ways in which you can push them to deliver more direct business to your hotel – if you’re interested in learning how to do this then keep an eye on the blog for our guide to using the OTA’s (coming soon!)

The risk of relying on Booking.com

Hopefully you’re aware of the saying “never put all your eggs in one basket”. If your hotel is relying too heavily on the business that Booking.com provides, stop and take a look at your strategy carefully. An OTA with the power and pull of Booking.com can and will pull your position on their site if they feel another property can deliver them more revenue. So if you’re dependant on the business that their site is providing you, you’re going to be in deep trouble if they decide to drop your ranking in their results. Try and calculate a maximum level of business that they provide, and watch this level carefully. If they reach above the level (lets say 20% but this will vary greatly per hotel) then take a look at your stategy again and the level of rooms you’re supplying them with.

A healthy hotel should be looking at the majority of its online bookings coming direct through their website (say 70% and above). The remaining percentage can be left for the OTA’s to fight over.

Why Reservations from Booking.com are bad for business

When a person books a stay at your property through Booking.com, they really have no brand loyalty to your hotel. You should be aware of the size, value and marketing spend that Booking.com have – in pay-per-click advertising they spend £x in 2014, with the majority of this spend going towards bidding on hotel names (but this is an article for another day!..) They’re a huge, selling machine, and their website is constantly testing and working towards increasing the number of bookings made. Their site was listed as one of the most persuasive in terms of sales (INSERT SOURCE) so it’s easy to see how they make so much money, and how they can invest so much in making more money.
But the problem with bookings made through this channel is that the user hasn’t shown you any loyalty – they’ve just booked through a non-direct channel. Chances are, they’ll book again-and-again using Booking.com. You can be sure that the newsletter-marketing and post-sale marketing push from Booking.com is huge. They offer “secret deals” for their loyal customers, and have all kinds of deals available. They have a mobile-app so they can be in their customers pockets (literally!) whenever they need a place to stay. Can your hotel compete with this kind of business? The answer unfortunately is no, but you can of course try to convert them into loyal customers. Again this is an article for another day, but you should be working towards encouraging these guests (as softly as possible) to booking direct at your hotel next time they’re in town.

The Unreasonable demands: Rooms and Commissions

One of the biggest reasons that you as a hotel should be wary of the business that you’re providing the likes of Booking.com is that each of these bookings are taking a big chunk out of your revenue. Each stay is taking up valuable availability, which should have been sold through your site (in ideal circumstances obviously). With the cost of these bookings coming in as high as X%, your hotel is really losing a lot of valuable revenue in the long-run.
Another frustration that hotels often speak about is the unfair availability demands that Booking.com place upon them. They’re never happy until they have really high rates of availability, and if you don’t comply they threaten with demoting your hotel position on their site. Tney have an army of employees who are devoted to calling hotels on a daily basis to check that they’re giving them the amount of rooms they require, putting a lot of pressure upon the hotel. But it doesn’t always have to be like this. Hotels can be braver on their stance towards room availability, and the use of the OTA.

A solution?

If your hotel is delivering say £50,000 in direct room bookings online every year, and Booking.com are providing £50,000 (but you’re only getting 50% of these, so £25,000 total), then why not consider reducing room-availability on the OTA channels, and instead investing a chunk of this £25,000 into your direct strategy?
£25k would be a huge sum to invest, but it could really benefit your hotel business in the long-run. You could invest in various branding campaigns – PPC advertising with Google and Bing, video advertising, search engine optimisation and so forth. This, if done well, can have the benefit of growing your brand online, leading in more direct bookings.

And you don’t have to suddenly decide one day that you’ll turn off the huge OTA tap that is Booking.com. You can try to reduce your room levels slightly, ensuring your still retain some visibility on their channel (which is still important as this is the most valuable aspect of using the OTA). When you have big dates coming up, and you know that your hotel will fill pretty well naturally without the help of an OTA, turn off your availability. Don’t give them a reason to book elsewhere, so force them to book direct with you. Ensure that you have slightly better rates available on your own website, regardless of the threats that the OTA’s give. And incentivise people to book direct with you – maybe a discounted rate, or some other benefit that isn’t available on the OTA deals like a free room upgrade or voucher for the restaurant. You can even try limiting the types of rooms you’re putting up ith the OTA, and leaving the most popular room types available to book through your site.

There are a number of reasons why you should be wary of the power of Booking.com, but hoepfully after reading the above article you’ll be a bit more confident when it comes to taclking your own level of dependance on this powerhouse.

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