For every single hotel, online booking engines have grown to be the dominant web portals in today’s daily fight around rooms and clients.
As the first online portals emerged, the hotel industry was happy to have additional distribution channels for their rooms. Easy handling and set-up with nice pictures and descriptions opened access to hotel inventory for those sites.
But the history and development of those portals is representative of fast-growing online solutions, and the boon and bane of this business was incalculable for most of the hotels.
Nearly every hotel worldwide, no matter whether it’s a chain or private, is now online on third-party websites. It is a simple, straightforward system that carries no risk to the hotel or destination.
Not long ago, most of the big booking engines in the market promoted their services with best-price guarantees, and some still do so. However, court decisions in several countries blocked this syndicate, as it was ruled that the price decision – which price is bookable where – should stay in the hands of each single provider. It is hard to find any other industry where it is common that a distribution channel is claiming the right of the best price.
What seemed to be very attractive in the early days of online booking engines is now an increasingly tough challenge for many hotels. In particular, in markets with a very large ratio of hotels and rooms to guests the door is opened for ‘price dumping’.
Largely, the ranking on those websites is bound by contract with the best price offered, compared with the hotel’s own average rate and the competitors in the market. It is clear how this can lead to hotels sometimes starting a loop of price dumping, offering a percentage off on the normal daily rates via big booking engines. For independent hotels, it can be ruinous both ways, as they not only lose out in terms of rate but also have to pay inflated commission on those rates – sometimes more than 20%.
Therefore, it is a goal for most of the hotels to move the traffic back to their own channels, either online or through other direct channels. Even when the syndicates of third-party websites do not exist any more in every market, it is hard to move clients back to the hotels’ own distribution channels.
The main reason for this, besides specials and additional services offered via third parties, is the handy and smart set-up and usage of those websites. Those hotel portals have done their homework. Along with direct price comparison with other hotels, they are offering the customer useful features such as:
- easy information about the hotel environment and accessibility
- flexible cancellation conditions
- pictures and videos – sometimes even 360° virtual tours through the hotel that often don’t exist on the homepage of the hotel
- comparable customer feedbacks about their recent stay in the hotel
- apps with last-minute offers
- an easy, streamlined way to book.
From a long-term perspective, the hotel industry has to arrange and include those websites in their strategy. To have room distribution firmly under their own control, and therefore having the costs and commission under their control as well, they must invest in their own online booking engines, as well as online marketing. After all, why should the customer book directly with the hotel if the booking process is not easier, faster and always available with all the features an online booking tool offers?
