Hidden cost of booking sites

Hi Tom, no problem about posting this link.

You’re absolutely right that we should be educating guests on how to save money, and how their choice of booking channels affects this. In my experience, travelers don’t want to think of hostels as businesses. They want to think of us a friends and hosts who do what we do for them because we love it. (And that’s all part of the magic that we create and the stellar customer service that we provide) They are, however, very curious about how hostels operate. If you develop a personal relationship with your guests, then they will be interested to hear about your personal challenges as well. A discussion about the commissions and how they cause both traveler and hostel alike to lose money is then both natural and appropriate.

As far as the article goes, it sounds good from the perspective of a hostel. It may not hit home with backpackers though. They may lose interest too quickly when they hear about things like “rate parity,” “room revenue,” or “adwords” that are foreign concepts to many of them. The ugly truth is that no matter how much they love you and your hostel, they’re simply indifferent about your costs. Their biggest concern is their own budget, so we all need to speak to them in that language and explain how things affect THEIR costs. You addressed this wonderfully by explaining that as we lose money through unnecessary commissions we will ultimately have to raise the prices and charge the travelers more. That argument impacts them directly. It might be more affective at the beginning of the article. Your starting line, “Did you know that every time you make a booking for a hostel or a hotel through a booking site, you are increasing the cost of your room?” already sets that tone, which is great.

Even if you don’t go into great detail, it helps to mention that the money they pay when they reserve through a booking site is actually a commission, and the hostel will never receive that money. (Many guests are genuinely surprised to hear this) After that you could explain that since the money is lost, the prices have to go up to compensate, and it ends up costing all of the travelers more in the end. (Note: “the prices have to go up” is a very different message than “the hostel has to raise prices” You become the bad guy in the second case instead of a victim of circumstance, which will do less to help your cause.)

Of course all of this is just my observation that should be taken with a grain of salt. I know what it’s like to spend time writing an article and making everything clear and then have someone start suggesting changes. Feel free to mutter some expletives under your breath and curse my name. I would.

I’m surprised that you don’t include the commissions in the rates you charge through OTAs. We have recovered a significant amount of money since we started that practice, and it made converting guests from OTAs to direct bookings a cinch. Our reception is in our common area, so people see other guests check in and hear the prices we charge them. We frequently have educational discussions with our guests about the difference in prices across booking sites and the reason behind it. The way we explain it is that we always set our prices the same across all channels. Each booking site, however, adds their own commission on top, which the guest pays as a “deposit” or “pre-booking” or whatever they choose to call it. (Or they pay it directly at the hostel instead of in advance in the case of Booking) If they want to get the best price, they should always check the hostel’s website, because Our Price + 0% commission = the cheapest they can get. If they just take 10 seconds for a Google search they could save enough money on each reservation to buy a beer and a kebab every time they make a booking. (Food and drink equivalents are the currency that many of my guests use to evaluate all costs) Obviously not all hostels do this, but isn’t it worth spending a few extra second to find out? Once they save money a few times they tend to make a habit of checking, just in case.