Are we on the verge of a parity nightmare?
Booking.com appears to have rolled out its Booking.Basic feature to European hotel listings, six months after it was first spotted on listings for hotels in Asia. Triptease’s latest white paper explores the implications of Booking.basic and other programs like it on hotelier-OTA relations worldwide.
Booking.Basic is an accommodation tier that periodically appears on Booking.com’s hotel listings when the rate provided to Booking.com is not the cheapest available online. The rates it offers are nonrefundable and made via a third party that is only revealed to guests after they have paid to book a room.
Thibault Catala of Catala Consulting told Triptease of how he first came across the Basic rate at one of his hotels in the United Kingdom:
“We first came across Booking.Basic on the 19th of December 2018 here in London. It was actually an overnight surprise, as we hadn’t received any kind of official communication about it from Booking.com.
“When we asked for more information, they explained how it worked and told us that there was no way to opt out. The only way to avoid it appearing to potential guests would be to improve our PQS (price quality score) and maintain rate parity online.”
Booking.Basic is far from a unique phenomenon. Many online travel agencies sell rates that they have sourced from a third party without a direct relationship with the accommodation provider. The third-party rates used by these programs and which undercut the direct price are often ‘rogue rates’ originally intended for wholesale distribution.
So why does it matter?
Booking.basic is one of many features introduced by online travel agencies in their push to have the most competitive rate online. Another is Booking.com’s Early Payment Benefit, which discounts the hotel’s rate in return for the guest paying up front on the OTA. While frustrating for hoteliers, the behaviour is understandable: Booking.com are offsetting the impact of ‘rogue rates’ on their business by putting those rates to work for themselves.
One UAE-based hotelier (who wished to remain anonymous) put it like this to Triptease:
“There’s no doubt that Booking.com’s tone [toward hotels] is not in the spirit of a good partnership. However, the problem they are trying to solve is not rate parity but rate leakage. Hotels have to retake control over their inventory, their distribution and ultimately the end-to-end customer experience.”
While it may have been executed in a manner at odds with a “partner-first” approach, the rollout of Booking.Basic will at least serve as a wake-up call to hoteliers not yet willing to approach the problem of controlling their downstream distribution.
“This issue is nothing new,” suggests Joe Pettigrew, Director of Revenue Maximization for Europe Hotels at Starwood Capital Group. “It has just grown now that Booking.com is doing it, rather than Amoma or TravelRepublic or Ctrip.
“I think the bigger issue we as hoteliers need to address is the notion of onward distribution. We need to control who should or shouldn’t get rates from our contracted partners – including OTA affiliates and their networks.”
This is an abridged extract from a white paper by Triptease. Read the full paper for full-length interviews and practical advice on taking control of your onward distribution.