Sometimes executives make assumptions based on gut feel but should hotels start thinking more like tech companies to take back control?
Love them or hate them – and yes hotels over the years have had a pretty tetchy relationship with booking.com – but few could dispute how successful a company the Amsterdam upstart has been.
After being acquired in 2005 by Priceline for $135m in cash, booking.com helped catapult its US parent from a $10m company to one worth over a billion dollars. This booking.com acquisition, along with others like Agoda, Kayak and more, was, as Priceline CEO Glenn Fogel outlined at a recent EyeforTravel conference, part of a strategic push to go global. “We found companies that knew how to sell the way people in Europe [and other parts of the world] wanted to buy,” Fogel said.
A decade on and in 2016, booking.com was responsible for 80% of Priceline’s annual revenues. Great news for Priceline! Not such great news for hotels, which over the years have lost control of inventory and forked out commissions of anything between 15 and 30% for privilege of a presence on OTA websites.
But with eroding margins and regulatory pressure brought to bear on OTA bullyboy tactics in the US and Europe, the fight back has begun. Recently, we’ve seen some hotels taking back control by innovating with loyalty programmes, technology and more, and even entering what are perceived to be ‘fairer’ deals with Google [that is another story].
Customer focus is everything
Although there is still some way to go, there is a growing recognition that OTAs, if managed correctly, can play a valuable role. But as Brian Harniman, a former Priceline executive and founder of strategy advisory firm Brand New Matter, puts it hotels need to “partner wisely”. Other advice includes using data to shift from cost per booking to cost-per-customer, providing real value (such as upgrades, free drinks and so on) and never ever allowing anybody to dictate RM practices.
Data is key here, something that booking.com understands well. Just about every decision taken here is driven by data, which are driven by a clear purpose. That purpose, Booking.com Commercial Excellence Manager Ben Bates recently told an EyeforTravel audience is, quite simply, about “keeping the customer at the centre of everything we do”.
This core goal is one of the secrets of booking.com’s success. Joerg Esser, a theoretical physicist and former senior Thomas Cook executive, believes that in these turbulent markets, it is Booking.com’s ability to ‘anchor a purpose’ that has made it so successful. Anchoring purpose is the first of five simple smart ‘ant colony inspired’ rules that Esser has been working on since leaving a senior role at Thomas Cook last year, that will give firms a ‘toolbox’ to drive real change.
