How Booking.com works. The shenanigans of a very profitable business.

I believe that just a few users really know how the booking commission’s system works, and how the majority of hotels are captive from their reservations. Even myself until yesterday, speaking with a new client (a Hotel) I was unaware of the fascinating world of Booking!
I am not talking about the commissions that they charge us (users), but about the high price that hoteliers have to pay in order to be there…

Booking takes advantage of the high percentage of hotels that do not care about their own website, their positioning on search engines, or do not know the formulas to promote themselves on the internet. In those situations is when Booking.com kicks in, offering candy in exchange for commissions generated by reservations. So far everything is quite perfect. The listing in Booking.com is free and the hotel pays only if a guest stays. Then what is the problem? The problem is that the Hotel becomes captive of this OTA [like most OTAs, note from the editor].

Why? Very easy. Booking.com offers you the possibility to enable a reservations page on your own website (zero cost) which means that anyone who made a reservation through your website is actually doing it through Booking.com (with Booking.com’s commissions). At the end of the year, the Hotel may have paid to Booking.com between 30,000 and 80,000 euros [35,000 to 100,000 USD] in commissions.

[Note from Editor] This is without taking into account Booking.com’s NOW service that introduces last-minute deals (guess who pays the difference?) and Villas.com, directly competing against Hotels, who have paid so far to contribute to all these new shiny services that Booking.com now offer to travelers at the expense of Hotels themselves! [end of Note from Editor]

All of this, taking into account that Booking does not allow Hotels to have lower rates in any other reservations engine or OTA. The portal tracks the prices of the establishment in other engines and if it detects a cheaper offer immediately gets in contact with the Hotel to indicate that there are some “anomalies” on your account.

And I say: could it not be more profitable for Hotels to invest on their own website, to place a direct reservations system, to take care of their website’s SEO and social media?

Even allocating a third part of the commissions that they are already paying for Booking on marketing online, could yield higher margins and higher ROI!

@hotelrsv

But I still have not told you about the scams of Booking. Well, they are not really scams, the procedure is perfectly legal, but the Hotel definitely suffers the most. When a user is looking for a Hotel in a Booking search engine it finds some information that helps him to decide which Hotel would be better for him. Part of this information includes: price offers, comments (reviews), and the stars of “Recommended places”… The stars are the most important element.

Each Hotel has its own control panel in which it decides what commission percentage it is going to pay for booking in order to appear before or after its competitors on the search results. The hotel will need to pay according to the number of stars it wants to have on the search results. For example: If I am a Hotel and I want to be on the first page of the search results, I will pay a booking commission of 50% or 60% of the price that appears on the screen, and my Hotel will appear as recommended with a number of stars between 3 and 5. This means that if the price of Booking is 70 EUR per night, Booking will earn the 50%-60% of those 70 EUR… not bad, right?

Now, if I decide that I want to pay 15% of Booking commissions, maybe the information of my Hotel will appear on the third or fourth page of the search results, and as a consequence I will have a lower number of reservations…

What is the solution? Do not let in the hands of others what you can do by yourself. Invest on your business starting with your web page, take care of positioning, diversify, and especially, pay for your own booking engine, and do not be held captive by a single provider.

Hoteliers around the world, there is life after Booking.com…

This post has been translated from it’s original version in Spanish under the approval of Mónica Carratalá. Follow Monica on Twitter @Carratala

Image by Isabel Vílchez Miguel isabelvilchez.deviantart.com

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  • andre

    I don’t think you understand why people use booking.com. Most people I know would not book directly on hotel sites, since there is no way to compare which hotel is cheaper and/or available at the given dates. If not booking.com thn hotels.com, expedia or any agency, you name them. I’m not in the business so don’t know their charging models, but I guess they are all taking their share. On the other hand it looks like the hotels still benefit from having them.

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