I was talking to a guest recently who works as a business advisor. When I told him that we pay 15% commission to Booking.com (and similar amounts to Trip Advisor, AirBnB, Agoda and all the rest) for bookings that come through them he was astonished. In any of the sectors he works in that commission rate should be more like 5%, or even less.
Online Travel Agents (OTAs) such as Booking.com have a business model which loads all the costs onto the accommodation providers, offering a free service to people wanting to make bookings. And a damned good service it is too. We are impressed by the design and ease of use of their systems. They certainly know what they’re doing. But how many customers stop to think who is paying for this fantastic service? Or where their money is going?
Being a bit of a data junkie I analysed how life has changed for Jungle Tide in the last few years, in terms of which routes our bookings come from. Back in 2011 over 80% of our bookings came through our own website, mostly people having found us on Trip Advisor and having clicked the link. We pay Trip Advisor a considerable annual fee in order to have a link to our website direct from our listing with them. And they still hit us for another 15% if anyone presses their “book direct” button. But if you’ve visited our listing on Trip Advisor you probably won’t have spotted our link. it’s a tiny icon, overshadowed by dazzling claims from online travel agents that only through them will you get the best deal. Not true! We offer cheaper room rates and better customer service to people who book directly through us – either via e-mail, phone, text or through Free-to-book on our website. Because that way we’re saving 15% by not paying commission to an OTA and it’s only fair to share that saving with our customers.
The figure now for direct bookings through our website is a little over 20%. A similar percentage is down to our own efforts – friends, friends of friends, repeat business, people recommended by former guests. Almost all the rest – well over 50% – comes through Booking.com. Our contact there is very helpful and as an organisation they are highly professional. But we still think 15% is way too much to pay for what is a very small service, no matter how well it is delivered. And, from what we hear, so do a growing number of small guest houses, B&Bs and homestays. Individually we may be microscopic but there are an awful lot of us and if we were all to reward direct bookings the OTAs might have to sit up and take notice.
But I know the mountain we have to climb. Once an organisation – be it Booking.com, or Trip Advisor, or Facebook, or Google – gets to be so good at what it does that people identify the organisation with the product or service (think of Hoover if you want an historic example) the competition is pretty well squeezed out. Market rules cease to apply. And just to make sure there’s no room for competition the giants form “partnerships” with one another. One day a few years ago we took a look at our Trip Advisor listing and were surprised to see a flash across it saying “We cannot find rates for this property”. Since we pay them for a business listing and this includes a link to our website where our rates are clearly displayed this was, we thought, some mistake, so we contacted them. No mistake. The flash was put there because at the time we were not signed up to one of Trip Advisor’s “partners” – Booking.com, Expedia, Agoda and the like. This was, we were told, Trip Advisor’s new policy and we were powerless to change it. So we signed up with Booking.com just so folks could see a price when they looked on Trip Advisor. I think they call it being over a barrel. Since then, Booking.com and Agoda have merged. Well, not merged, they are just owned by the same parent company. So that’s all right then.
So, if you want the best prices and the best customer service, and you would prefer that 15% of your money to go into the local Sri Lankan economy rather than into the pockets of a multinational – or if you’re just feeling a bit rebellious today – BOOK DIRECT!
Thanks for listening.