
For Hotels, There’s No Room Left for Online Travel Agencies - antr
http://www.foxbusiness.com/features/2017/05/28/for-hotels-theres-no-room-left-for-online-travel-agencies.html
======
briandear
I feel compelled to respond since I am on both sides of the hotel business.. I
own a tiny hotel in the Luberon and I also fly about 50k miles per year
(staying in hotels along the way.)

Booking.com has been amazing for us. They take 15% but it is completely worth
it. We don't have "a name" nor do I have time to invest in the relentless SEO
content marketing necessary to differentiate us when people search "hotels in
the Luberon" or "Provence hotels." Since we are a very small place (just 3
suites,) it's an unprofitable use of my time to be generating blog content and
engage in full-court-press inbound techniques -- so unless you are a chain or
happen to be featured by travel writers, good luck being discovered via
inbound searches.

We do have a website and a good direct booking system, but we probably get 3
bookings per year directly from our website yet between Booking.com and cross-
listing on AirBnB, we are completely booked through most of the season. Our
booking software is integrated with Booking.com and AirBnB so we are able to
have all of our channels coordinated with a minimum of work. If one considers
Booking.com as a lead-generation system, 15% is a huge value. I would easily
spend far more if I were marketing directly through ads. Our TripAdvisor page
is free -- we haven't paid the yearly €799 fee for an enhanced listing but
TripAdvisor still is great for us since we have 4.5 stars.

Guests from Booking.com are far less work than from AirBnB or direct. AirBnB
customers seem to still not understand what Instant Booking means -- we get
almost daily inquiries of "do you have availability for some date" \-- yes,
obviously that's why you are able to instant book! AirBnB guests tend to want
to have long conversations while Booking.com people just book and show up with
a minimum of fuss. We also have a very liberal cancellation policy, unlike
many places in the region -- we found that just letting people cancel whenever
they want works out fine in the long term because are area is high demand so
cancellations don't really cost us anything because we quickly get rebooked
during peak season. So everyone is happy. In terms of taxes -- our prices have
all of that included.

My point is that sites like Booking.com and AirBnB have made our business --
we essentially incur no marketing costs. So we love Booking.com! It honestly
doesn't matter one bit of you book directly with us or via Booking/AirBnB --
our prices take our costs into account so you aren't "hurting" us if you book
through a third party. We are just glad to welcome any guests however they
find us. The big chains probably get hurt the most by third party booking
sites because they are already spending money on marketing and have name
recognition, where for ultra-small-timers like us, you probably would never
have heard of us without those third party sites.

The short version: third party sites add huge value to our business -- they
get to do the hard work of marketing us while we can focus on the guest
experience.

~~~
yabatopia
The 15% seems fair. I'm not that familiar with the travel industry, how much
more is that percentage compared to the commissions paid to traditional travel
agencies pre-internet age? There were always,or at least very often, middlemen
involved in the travel industry. Is the cut that for example Booking.com takes
really that much bigger than travel agents used to take in the eighties?

~~~
gimiluv
Traditional travel agencies take approx. the same amount as a commission and
do so off of less competitive rates so the consumer ends up paying more. They
don't notice because its usually bundled into the price with airfare.

------
stupidcar
If hotel chains were managed by sensible, tech-aware people, they wouldn't
bother with these expensive, rearguard marketing campaigns. Instead, they'd
get together and form an industry working group, and design simple, standard
data formats and querying/booking APIs, and then make all their data available
through them.

This would make it far easier to build a hotel search engine, which would
cause an explosion of competition and innovation in this area. This in turn
would undercut the power of the leading agencies, and drive down referral
pricing.

But they won't do this. You see the same problem in so many industries.
Vendors act like data _about_ their offering is more precious than the
offering itself. They make it as hard as possible to build an aggregator, so
the aggregation market gets tied up by a tiny handful of players who are
willing to invest enough to build a scraping infrastructure. Then they panic
that these aggregators have too much gatekeeping power, but rather than
encouraging greater competition amongst aggregators, they respond by trying to
put the genie back in the bottle.

~~~
barrkel
This would reduce the hotel's value proposition to a commodity. It would only
work for the most impersonal of hotels, the hotel equivalent of McDonalds,
competing on price and standardized features. The kinds of hotel you wouldn't
want to stay at, if you had a choice.

~~~
Helmet
I love staying at those hotels. In fact, I wish hotel rooms were commodities
that competed on two factors: cleanliness and quietness. Everything else to me
is frivolous, as I'm not interested at all in spending any time in a hotel
outside of the time it takes me to get ready in the morning and sleep at
night.

~~~
dragonwriter
> In fact, I wish hotel rooms were commodities that competed on two factors:
> cleanliness and quietness.

A commoditized market has products, by definition, that compete on one factor,
price.

If you care about cleanliness, quietness, or other qualitative features being
areas of active competition, you don't want a commoditized market.

~~~
Retric
Commoditized market does not mean lack of options or low quality goods. It
just means the differences are predefined aka it's X octane gas without lead
and a bunch of other things that you don't need to see on the pump.

People don't just buy generic meat they buy Grade A (means something) Prime
Rib (means something) Angus Beef (means something).

~~~
dragonwriter
> Commoditized market does not mean lack of options or low quality goods.

No, but it does mean that goods are perfect substitutes that compete only on
price, although it is a condition which in practice is approximated more often
than actually attained.

> People don't just buy generic meat they buy Grade A (means something) Prime
> Rib (means something) Angus Beef (means something).

Right. "Meat" isn't even approximately a commodity. A particular cut and grade
might be approximately a commodity (though makers will actively seeking to
decommoditize it by building brands; no one wants to sell into a commodity
market, since basic economics mean that competitive factors will drive market
prices in such a market down to producer costs and eliminate profits.)

------
tallanvor
“There had been this perception that to get the best price, you book through a
different channel than going direct,” he said. “That’s never actually been the
case.”

Yeah, that's a load of crap. I always start with an aggregator, and if I find
a place that I like, I check their website as well. Unless they're cheaper or
offer some major perks, I book through the 3rd party site. Of the last 5
hotels I've booked, going through a 3rd party site has been a better deal 4 of
those times.

~~~
rorykoehler
Many hotels have contracts which ensure they can't undercut 3rd party
resellers. The trick we used back in the day was to offer the same price on
the hotel website while bundling in a bunch of freebees such as wine/dinner
etc.

~~~
law_of_the_hobo
That explains my recent experience.

I booked for a noticeably (~10%) cheaper price directly through a hotel
website, but I wasn't able to get just a room. I had to book a package which
included free tickets to a nearby tourist spot.

------
flexie
It has become ridiculous with these booking sites. When you google a small
hotel, often the first many results are hotels.com, bookings.com,
tripadvisor.com etc. and the hotel itself is down to spot 3, 4, 5 or even
lower.

There is a place for the booking sites, especially for exploring several
hotels at a time. And they do offer some reviews and comparisons that can be
useful. Sometimes, they also offer the cheapest price but usually it is just
as cheap to call the hotel itself or book through its website. And it really
feels good to pay the hotel that offers the services, instead of some tech
company in the US.

~~~
kbart
_And it really feels good to pay the hotel that offers the services, instead
of some tech company in the US. "_

Most of the times I booked through booking.com it was "cash on arrival", so
these sites are nothing more than ads. I think the problem is travel agencies,
that book bulk of rooms to rent them later (just a guess, can't read the
article itself due to paywall).

~~~
usrusr
> Most of the times I booked through booking.com it was "cash on arrival", so
> these sites are nothing more than ads.

Expensive ads. Cash on arrival does not mean that the hotel does not pay a
sizable commission. Roughly in the range as the cut iTunes, Play, Steam take
for transactions that, unlike hotel service, create zero cost beyond the
initial investment. Occasionally, hotels might even offer you a cheaper room
if you cancel your reservation, to get out of that obligation. Maybe some
sites are much cheaper, but the big ones like booking.com take everything they
can, and they can take a lot.

~~~
falsedan
> _but the big ones like booking.com take everything they can, and they can
> take a lot._

You mean, take as much as is offered? The hotels are free to let the rooms sit
idle & refuse the bookings; they wouldn't pay these commissions if they didn't
make business sense.

A $100/night room that's empty generates $0 and costs $10-20 (amortised
staffing and maintenance costs, insurance, permits, etc.)

A $100/night room filled with a 30% commission generates $70 & nets ~$50.

I think that most hotel managers would not list their preferences as: direct
booking & ~$80 > empty & $0 > booking site & ~$50.

------
TekMol
Is it really all just about price? I am rather price insensitive. Usually stay
for about $150/night but I don't mind paying up to $300.

But I could _never_ book via anything then booking.com

Without it, how do I know the pros and cons of a hotel? Every hotel site will
tell you they are great. But not if they are next to a noisy street, that the
staff is unfriendly and that the rooms are much smaller then one would expect
from the images.

~~~
chipotle_coyote
It's not unreasonable to use a site like Booking.com or Hotels.com to get an
overview of hotels in an area, then once you've narrowed it down to two or
three choices, to _go directly to those hotel sites_ and check prices. Yes,
it's going to take you a little more time, but you'll sometimes find better
deals, particularly if you're willing to take a few minutes to sign up for a
loyalty program or two. Arguably, if you sign up with one of the companies
that own a dozen brands or so, like IHG, Hilton or Marriott, you're likely to
have a choice of a half-dozen hotels or more that accept that single reward
program. And I've noticed friendlier, more responsive customer service as
"Watts, [Loyalty Program Name] Member" than as "Watts, Guy who Prepaid on
Hotels.com" often enough that I don't think it's my imagination. (And as
another commenter mentioned below, sometimes you get kinda suboptimal rooms if
you're booking through an aggregator. They're making less money off you and
they know it.)

~~~
TekMol

        sometimes you get kinda suboptimal rooms if you're
        booking through an aggregator. They're making less
        money off you and they know it
    

I would expect the opposite. When you book via an aggregator and they provide
bad service you can fight back via a bad review. When you book directly you
are completely at their mercy.

Example: I just checked the Ritz-Carlton in Berlin. And on booking.com it's
clearly stated that Wifi is free. So I would expect I can rely on that. On the
Marriot website the hotel, it's written in the small print that you have to
pay extra for wifi. So I would expect them to fuck me over and bill some
outrageous €25 per day or something for wifi.

~~~
chipotle_coyote
See, I'd probably assume that the hotel's own site has the information right
and it's Booking.com's information that's wrong--which may or may not be
correct. :) Either way, though, I wouldn't assume that people who book on
Booking.com get free wifi and people who book on the Marriott site have to
pay; it's much more likely that one or the other site is incorrect: either the
wifi is free or it isn't. (Or like Hilton, it's always free if you're a member
of their rewards program.)

As for reviews, maybe? Hotels have to care in (ahem) aggregate, sure, and it's
probably true that more people see reviews on travel sites than on Yelp or
Foursquare (although it's sometimes interesting to compare). But if you're a
hotel loyalty program member, then they have incentive to make you want to
think well of their hotel brand.

Anecdotally, I've never gotten _bad_ service from booking from Hotels.com;
it's not like the hotel staff goes out of their way to be difficult or
anything. But I've noticed that I'm more likely to get a room right by the
elevator when I book with them, while I've noticed that booking as a Hilton
Honors member seems to be fractionally more likely to get me a free upgrade,
or a welcome note from the manager at a hotel that didn't give me one two
years before when I booked on the third party site. All anecdotal, possibly
coincidental? But still something I noticed.

~~~
TekMol

        I'd probably assume that the hotel's own site has the
        information right and it's Booking.com's information
        that's wrong
    

There is nor right or wrong. If they advertise their rooms with free wifi on
booking.com they are legally bound to offer free wifi when you booked via
booking.com

------
gt2
What is the best priced 3rd party service currently? I use hotels.com because
I find it has the lowest price usually, plus you effectively get 10% off since
every 10 bookings you receive a credit worth the average of your previous 10
night stays. But I wonder if theres a better booking service out there than
this for someone who books a lot of hotels.

~~~
chrisp_dc
In the last month I've used hotels.com twice because it was lower than booking
directly.

In SF: Hotels.come was $180/night, hotel's website was over $300/night.

In Copenhagen: Hotels.com was $120/night, the hotel's website was over
$180/night.

I'm not sure why these places are running sales on hotels.com, and not on
their direct website. I try not to book on hotels.com because hotels have a
reputation for giving those travelers the worst rooms (double beds vs. king
bed, next to elevator, unrenovated rooms). However, it's hard to say "no" to
30%+ off.

------
jaclaz
The base issue is that the fees that agencies/aggregators like booking.com are
(IMHO outrageously) high, in the 15% (a minimum that I believe very few hotels
pay) up to 25%-30%. On average, it is something like 18%-20%.

To have a term of comparison, in the old times when travel agencies existed,
the fee was more in the 5%-10% range.

Small hotels must submit to them to have any visibility on the net, and (I
believe it depends on countries, in some the clause has been deemed as
invalid) the contract states that the hotel must not expose to the net (on its
own site) a price that is lower than the one on the aggregator.

Hotel chains might have the visibility and resources to bypass this perverse
mechanism, and even if they pay the lowest fee of 15%, in times of low margins
every fraction is important.

~~~
Grue3
But consider that there's basically zero chance that I (as a typical user)
will book a hotel if it's not listed at booking.com. Just because I must read
real guests' impressions of the hotel to avoid the ones with bad Wi-fi. That's
much more valuable service than what travel agencies provide, so it makes
sense it costs more.

~~~
jaclaz
Maybe we are talking of two different kinds of travel/hotel agencies.

Once upon a time there were travel agents that put their name (and face)
upfront to the customer, guaranteeing when they recommended (and booked in
behalf of) a given hotel (or vector/transport), they usually knew (from direct
experience or from "verified" reports) the qualities of the suggested hotel or
travel arrangement.

And - just for your interest - the "real" adjective when talking of guests
impressions reported on booking.com (and much, much worse than that on
tripadvisor) is something that needs to be attributed with more than a pinch
of salt.

~~~
Grue3
>the "real" adjective when talking of guests impressions reported on
booking.com (and much, much worse than that on tripadvisor) is something that
needs to be attributed with more than a pinch of salt.

I have personally reviewed every single hotel I stayed in, and none of my
comments were removed or altered in any way. Which I sadly cannot say about
HN.

(I have a suspicion that the overall hotel rating might be fake, and I rarely
pay attention to it, but in my experience the reviews are spot on)

------
andrewf
When the "Hilton" hotel is actually a franchisee, aren't the aggregators and
the "hotel chain" basically in the same business?

It's structured differently, but you still have a company with a
(multi-)national brand presence funneling customers to independently owned
hotels in exchange for a cut.

In a future where everyone books through hiltonhonors.com and spgdirect.com
instead of booking.com, will the actual hotels make more money, or will the
chains just start capturing more of that value for themselves?

------
chx
I have, more than once, booked an apartment through booking.com which were not
available by any other easy to find means. It is quite curious but it is what
it is.

------
metaphor
Anyone have insight on where GSA's published per diem rates[1] fair in the
gamut of hotel pricing? Seems to be the pre-tax lower bound of decent 2/3 star
hotels.

[1]
[https://www.gsa.gov/portal/category/100120](https://www.gsa.gov/portal/category/100120)

~~~
wl
My experience has been that you can almost always find decent three star
hotels at normal rates for under 125-150% of the GSA published rate. The
exceptions tend to be when there's a major event that causes exceptional
demand.

~~~
metaphor
I agree, and that has been my experience as well.

I tend to use GSA's published rates as a benchmark to vet reasonable cost when
shopping around. It's typically the case that I can find lodging
accommodations that are appreciable less expensive, but they're almost always
at establishments of questionable quality.

------
draw_down
I had a really bad experience recently with Travelocity. I needed to change
dates for a stay in SF, which ended up being very costly in addition to being
a hassle. I was forced to cancel the stay as well as pay the entire cost for
the stay, and there was no way to do it online. I had to sit on the phone with
a Travelocity agent who called the hotel to "negotiate" (which did nothing but
waste time), then they started telling me about some Travelocity deal
involving coupons, etc. It was confusing in addition to being a waste of time
and money.

I would probably just book directly these days. Hotels seem to have had it
with dealing with the aggregators.

------
losteverything
It seems like since aggregators prices have gone up across the board.

There used to be the $19.99 best western in Mississippi but now you cant touch
anything for under 50. Flipping through the BW directory was very enjoyable.

It was quite fun to grab that $14.99 holiday inn room " great rate" because i
was an 800 number expert.

We still go to a dinky place in Maine off the grid ($39 off season with
dogs/$89 in).. I hope they never sell.

------
git-pull
These types of news articles about prospects often are driven by an ulterior
motive.

When the job market is saturated:

There's a desperate shortage / skill gap of programmers, truckers and
pharmacists. Go join this trade school for 16k! The economy is going to hell
in a hand basket if we don't churn out 1000 new Javascript programmers every
12 weeks!

When travel agencies want cement their dominance and pour cold water on new
competition:

Things are full, really! Don't bother applying Y Combinator as an online
travel agency. You're just wasting your time and won't be able to generate any
VC or get a single hit to your website! It's futile for... reasons!

~~~
falsedan
> _Lol_

Who is this comment addressed to? The article doesn't make these claims, and
you didn't reply to another comment.

------
horsecaptin
Perhaps AirBnB should open up to Hotels and that way all Hotels and BnBs can
live in one place for a far better customer experience.

~~~
therealmarv
yes, let's put everything in one bucket like with Facebook, Amazon, Google,
PayPal... you see, that does not solve all problems ;)

------
dazc
[http://www.foxbusiness.com/features/2017/05/28/for-hotels-
th...](http://www.foxbusiness.com/features/2017/05/28/for-hotels-theres-no-
room-left-for-online-travel-agencies.html)

~~~
posguy
Any chance we could get the link changed to this non-paywall one? Same content
it appears...

------
jkoll
[https://outline.com/9tNWkz](https://outline.com/9tNWkz)

------
downandout
Paywall bypass link:
[https://m.facebook.com/l.php?u=https%3A%2F%2Fwww.wsj.com%2Fa...](https://m.facebook.com/l.php?u=https%3A%2F%2Fwww.wsj.com%2Farticles%2Ffor-
hotels-theres-no-room-left-for-online-travel-agencies-1495974698)

~~~
downandout
Curious how this got a downvote. Apparently WSJ employees read HN lol.

~~~
jonknee
Perhaps because the link got changed to a non-paywall version hosted by Fox
Business...

~~~
downandout
I posted this long before they did that.

