Over the past year or so, here in the UK we all know that Booking.com (as well as other OTA’s) have ‘softened’ their approach. They want us to believe that they are partnering us with a softened account management approach and a relaxing of their rate parity clauses. But is this really happening? Are they really on our side. Well of course not…
NB: This is an article from Right Revenue
Rate parity is a huge issue for us all and just this week I had a hotel call me to say that they had found that Booking.com were under-cutting them by 12%! Of course this resulted in a call from the hotel to their account manager only to be told that the hotelier ‘needed to read their booking.com terms and conditions’.
So off this particular hotelier trotted to read the terms and yep, you guessed it – Clause 22.2.2 (or-there-abouts) states that Booking.com have the right to under-cut your direct sales price ie the rate you have given them to sell, by any amount up to the value of their commission – on a closed user group.
I can hear the alarm bells ringing as you read this, wondering ‘did I sign the same agreement?’ Well I can pretty much guarantee that you did. And note here the words ‘closed user group’. This was not the case and the discounted rate was publicly available.
I have written many times about the need for hoteliers to treat all third party contracts seriously. Lets face the facts – you have OTA’s that are perhaps contributing up to 40% (sometimes 60% god forbid) of your room business and the contracts you signed to agree to that strangle-hold are barely read.
Think of those contracts in the same way as you would to a pre-nup… You are getting into a relationship with someone; you feel this person is going to add to your life; bring you only good things; you imagine holding hands and skipping off into the sunset. Well reality check guys – the person you are getting into a relationship with, wants to drain as much out of you as they can – think Heather Mills v Paul McCartney!
You need also to watch for a new practice which Booking.com trialled in Asia and which is now being rolled out to Europe and the UK – Booking Basic.
This is the practice where Booking.com will offer to make a booking for your customer on another third party site if they find a price cheaper than their own site. Why on earth would they do that you ask? Well for two reasons. The first is that they want to instil trust with the customer. They want the customer to believe that even if Booking.com don’t have the best rate, they will always offer your guest the best rate, even if this means them ‘losing’ this booking to another third party. But lets face facts here, most of the third parties these reservations are being pushed to are Booking.com subsidiaries and quite frankly could be OTA’s that are using your nett Tour Op rates (think Anoma!) to under-cut you. Booking.com want customers to believe that they are a site worth trusting, in that even if they don’t have the best rate, they will find you the best rate. Why would a customer not book with them?
Secondly, what on earth does this do to the rate parity agreements that Booking.com have been berating you with all these years? This makes a mockery of everything.
Be under no illusion, the control has been taken out of your hands. Gone are the days when OTA’s contacted you to wrap you over the knuckles if they spotted a lower rate somewhere else. Now they are immediately offering that rate, whether you like it or not.
My advice – watch this like a hawk!
- Use the Meta-Sites to see if any OTA’s are under-cutting your prices (and according to a TripTease study, Agoda does this 27% of the time; Expedia 13% and Booking.com 11%*). Then make a booking to see exactly where these reservations are originating from (and don’t forget to cancel it) and then give that particular agent two chances to rectify it and then ‘strike out’.
- Watch Agoda and Anoma to check your nett rates aren’t being displayed and for goodness sake, try and take some control back. Do you really need to be on these sites???
- Send your BAR rates to the OTA’s but ALWAYS have a cheaper rate direct. If you do have a ‘Book Direct and Save’ rate on your site already, remove any pre-book or non-refundable clauses. Make the process of booking direct as easy and cost effective for your guests as possible. Take back the control on you rate parity.
And please, please, please review your contracting. You would not take any other contract put in front of you lightly, so why take this one. Treat it like a pre-nup and for goodness sake, don’t end up like Paul McCartney!
