Visibility is the goal of any hotel. And providing visibility is the OTAs’ major value proposition. It sounds like a perfect match.
NB: This is an article from mirai, one of our Expert Partners
However, not everything that glitters is gold or, in other words, not all visibility boosters are effective and, not to mention efficient. The big trick (maybe lie?) behind them is how to prove their incrementality beyond the “you’ll get more bookings” promise of their account managers.
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This lack of transparency makes OTAs’ value proposition blurry. Still, many hoteliers take the bait and jump into any new booster with a fancy name.
Two of these confusing visibility boosters are the “free room upgrade” and “free breakfast” by Booking.com. Do you know how they work? Do they generate incremental demand for your property? What are the drawbacks they generate?
Free Room Upgrade and Free Breakfast add-ons
A quick summary how the programs work:
- It is only offered to Genius 2 and 3 members, or those who completed five stays in two years. Something not very difficult these days. Unfortunately, Booking.com does not disclose the numbers of its loyalty program by tier, so you cannot know how many potential guests you can target. But don’t worry, the OTA is working hard to grow its customer base so that number can only grow.
- Booking.com highlights the programs’ benefits with irresistible messages such as “boost your property”, “attract high-value guests”, “drive more bookings” or even “increase occupancy”. What hotel on earth does not want all that? Sounds terrific!
- You pay the same commission as with any other reservation. Additionally, Genius 2 is associated with a 15% discount. If Booking.com is paying you with a VCC or virtual credit card, add from 2.5% to 3.5% financial cost. Finally, with every free upgrade you are filling a more expensive room, consequently reducing your ADR if you end up reaching maximum occupancy. Your food & beverages (F&B) would get the impact of all those breakfasts given away for free. These bookings do not seem attractive from a profitability standpoint, do they?
- Booking.com offers some options to limit the programs’ impact: a number of room upgrades per day and a maximum booking window (only in the room upgrade) and blackout dates (available in both add-ons). Few options but better than nothing. At the end of the day, Booking.com knows few hotels will set restrictions and, those that do, will eventually forget keeping it updated making these limits eventually without effect.
- Although you can select the room type to upgrade, the only options are your cheapest or the best-selling one. Booking.com wants to make sure you don’t choose a more expensive room type to lure the guest to finally reserve the cheap one. Obviously, you can select as many room types as you want in the “free breakfast” add-on. The more types the better (for Booking.com).
The questions you should really ask
Before making a decision whether these are good programs for you or not, you should make sure these two questions have a clear and well-reasoned answer:
