Friday, 5 November 2010

Here's why charging commission for online bookings is unsustainable

Lots of B&Bs and guesthouses use online booking services which charge the B&B owner a commission for handling the booking. So it ends up costing the B&B owner more to receive an online booking than an offline booking, which is just a bit nuts, it should be the other way around.

Can you imagine if an airline charged you more to book online than to book over the phone? It would be crazy. Their low-cost, automated online booking system would be deserted and their call centre would be overwhelmed.

But that's exactly what's happening amongst those independent accommodation providers using commission-based services to handle their online bookings. Here's a table from a recent report aggregating data from one such service in the United Kingdom, showing how average room rates for online bookings are a whopping 11% higher than for offline bookings:

The guest is effectively paying a booking fee of £6 per night for the privilege of booking online.

Whether that's because owners are actually publishing higher rates online than they offer over the phone, to compensate for the online commission they have to pay; or whether they are just more ready to discount on the phone (because they know they have more margin to play with), is immaterial. Guests are paying more to book online than offline, and that's just topsy-turvy and ultimately unsustainable.

(By the way, I wonder whether the next quarterly issue of this report will still show the online vs offline split?)

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Paying commission on bookings from your own website? Try KeepMeBooked: commission-free online bookings for your B&B or guesthouse.
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1 comments:

  1. The other point about commission based reservation system pricing is this:

    Imagine a hotelier is on the phone to a prospective client. The client has every intention of booking. What is the preferred call to action? Well I would suggest that you get them to book online (so the conversation can be terminated efficiently) rather than taking a 5 minute booking over the phone.

    (Additionally it means that the hotel can find out where the customer came from - as online bookings have associated tracking analytics)

    If the owner knows they are going to have to pay a % for the online bookings (but not for a booking they take themselves) - as a reservation system provider you are enticing them to stay inefficient.

    Only a thought

    Now if anyone wants a non commission based res system for tours....

    ReplyDelete

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