With new research throwing light on the issue, this week on the Htet Tayza blog I ask; are booking sites damaging the hospitality industry?
The Ability to Reach a Vast Customer Base
Anybody who has built a certain type of hospitality venture from the ground up i.e. a hotel, a spa etc., will be familiar with booing sites. Operated by third parties, people use them to make a reservation.
Booking sites have often been championed by the industry for their outreach potential. They have the ability to reach a wider customer base than all but the largest of hospitality businesses. But are these sites hurting, rather than helping to grow, profit margins throughout the sector?
Booking Sites Earn an 18% Commission
I came across an article on The Argus last week, which suggested that offshore booking sites such as Booking.com and Expedia are earning an 18% commission on guesthouse and hotel bookings in Brighton, UK. A small corner of the world, maybe, but considering that fact that all booking sites make a commission, it could be applied to every corner of the globe.
Essentially, what is being argued here is that these hotels are spending money that they could be saving by cutting out the middle man, and drawing consumers in directly. Considering the marketing power and vast reach of booking sites, which just isn’t available to smaller hospitality establishments, however, this would be no mean feat.
The Industry Needs to Cut Out Intermediaries
The new chairman of the Brighton and Hove Hotels Association, Jeremy Ogden, commented on the issue. He said that “A huge amount of business now comes from online intermediaries like Expedia and for customers this might offer a cheap price. But for hotels it is really affecting margins.
“We need to bring in more business direct and find a way to cut out the intermediaries. Ultimately it would be good if they reduced their commission. We need to get the message out this commission is going to offshore companies. If customers want the quirkiness and individuality Brighton is famous for they need to support us.”
Diversifying the Hospitality Industry’s Outreach Potential
Ogden’s words should apply to the entire industry. Booking sites are appearing all over the place, and the simple fact that they earn a commission, means they are using up funds that could alternatively be used to help grow the sector. In this way, booking sites could be said to be damaging the hospitality industry.
Of course, getting rid of them isn’t an option at the moment for most ventures; they provide vital business that they need to keep their profit margins stable. That is why the hospitality industry as a whole needs to explore how to use modern tools like social media, to diversify its outreach potential.