Hotels are apparently losing up to 30% of revenue from cuts in commission or merchant fees as a result of the rapid rise of the same-day mobile booking apps in the marketplace.
So says Mobile Travel Technologies, the Dublin-based mobile web and app technology company - leading it to create what it claims is the first white label same-day mobile booking service for hotels.
MTT says Eleventh Hour will address problems relating to inventory control, "revenue cannibalisation" and commission by allowing hotels to provide their own same-day booking service in a branded app.
The idea is that chains (clearly the target market, as opposed to small, independent properties) will be able to control their own pricing, set exclusive deals and the number of rooms made available each day, as well how to promote the offers.
MTT CEO Gerry Samuels says the most important element of the service is that the only competition in the app will be between hotels in the same chain.
"Moreover, for those hotel chains without a mobile offering yet, it is the ideal way to get a foot on the mobile ladder while selling last-minute empty rooms."
The growth of services such as the high profile and US-based HotelTonight, European counterpart BlinkBooking and newbies such as Hot Hotels has triggered some concerns amongst hoteliers that they are, despite relative enthusiasm for the model, forced to relinquish some control over their product and pricing.
These issues were arguably compounded by the big boys of the online travel agency wading in with their own, similar services, such as Booking.com.
Commenting on the worries over possibly 30% of revenue slipping away as a result, Samuels says:
"Considering that the rate may already be heavily discounted, there is only a small slice of the pie left for the hotel as profit."
We asked MTT why would a hotel do this instead of just putting the same fucntionality into its existing app or mobile web service?
"The last-minute market is an emerging and distinct part of the hotel market. We know this already from the positioning of Booking.com Tonight’s app, Hotel Tonight etc. and it’s quickly becoming a crowded space
"Hotels would not integrate the Eleventh Hour Hotels app into their existing app or mobile website because they need to target distinct personas who need last second deals. By using Eleventh Hour Hotels app hotel chains avoid cannibalization of customers who would normally book in advance and pay the higher rates.
"With an Eleventh Hour Hotels app, the hotel chain can brand it and have a slight distinction in the app name such as ‘Hotel Europa Today’ or Hotel Europa Tonight’ so it is clear the app is only for same-day bookings.
"And with an Eleventh Hour Hotels app they can only target it to find new customers for unbooked rooms on any given night. And also they can control what inventory and deals they upload to the app and change it in response to how full or not their hotels are on any given night as well as matching it with predictable revenue/occupancy patterns.
"On the regular web, there is a significant segment that will go directly to the hotel’s website to book instead of via an intermediary. The same applies for mobile.
"Until now, a hotel chain’s only option was to give their last minute inventory to an intermediary. With an Eleventh Hour Hotels app they can do their own thing and retain control on last minute rates, branding, their positioning within this market, the last minute inventory they promote and how they market it
"Also the hotel chain gets a well-designed app with excellent usability, at no up-front cost that is entirely in their branding ! And with a commission rate less than half of the typical levels charged by an intermediary…"