I got a chuckle out of this one: Why budget hotels are worse than airlines over online fees. Despite the title it has nothing to do with airline fees. It’s an article about how ridiculous it is that budget accommodation providers would charge more for online bookings than for reservations made by phone.
Most small establishments don’t even offer online bookings yet. But of those that do, most are paying commission on every one of their online bookings.
This is a bit nuts, because the commission creeps into the rate and guests end up paying more to book online than offline.
But there is no escaping the fact that the average room rate is higher for online bookings than offline bookings, and that’s just not right.
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Online booking should be cheaper and more efficient than booking over the phone. Independent accommodation owners should be encouraging those guests who want to book online to do so, not telling them to pick up the phone.
Not surprisingly, the article was written by the founder of an online booking system. Of course he wants everyone to book online!
I’m not sure that his theory applies to most hostels though. Due to high competition between hostels we don’t tend to raise the online rates to account for the commissions. Even a small increase in price could result in a dramatic shift in market share. We swallow the commissions ourselves as part of the marketing costs. I may be wrong on that though. Do you bump up your prices and pass the cost of the commission on to your guests? Do the other hostels in your city do the same?
One of the comments below the article is quite correct in my opinion:
But let’s look at this another way: direct bookings don’t incurr commission costs and in turn, the cost SAVINGS from a direct booking can be passed on to the direct booking customer AS A DISCOUNT! So think not of it as on-line bookings costing MORE, direct bookings may cost LESS.
The strange thing is that I see some hostels doing exactly the opposite. They’re charging more for telephone and walk-in reservations than they do for online bookings. THAT seems ridiculous to me. I have seen backpackers use a hostel’s own free internet to book a bed at a lower rate and then return to the reception desk to check in. Instead of matching the price and losing the difference between the two rates, the hostel lost that difference PLUS the commission to the booking engine on top of it. They threw their money right down the drain on a guest that was already standing in front of them. Can anyone explain how that pricing strategy could make sense?
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