The relationship between hotels and online travel agents has become an uneasy one in the past couple of years as hoteliers seek to bring down the cost of sale and realise how reliant they have become on the intermediaries.
Many of the large chains, such as Marriott and Hilton, have been pushing back recently by offering better rates to loyalty scheme members who book direct.
OTAs defend their position in terms of the marketing and reach benefits for properties but the waters are still choppy.
Enter Hotel Bonanza, a startup which says it wants to make everything a little fairer.
Q&A with co-founder Suzie Barber:
What problem does your business solve?
Hotel Bonanza is a new online travel agent charging a fixed rate of 8% commission that offers consumers a membership scheme giving 5% off every booking, paid for by us. Our mission is to deliver a better deal for both properties and consumers by offering a fair rate of commission and a customer loyalty scheme, all run from a single, easy to use digital platform.
Names of founders, their management roles, and number of full-time paid staff?
Hotel Bonanza was formed in 2014 by the senior management team of Bhavin Swaly and Suzie Barber. There are six other members of the team at present, including technical and design gurus. This number will increase shortly in line with our expansion plan.
Funding arrangements?
To date, the project has been funded by the founders.
Revenue model?
We will charge the accommodation providers a fixed rate of 8%. An optional annual membership will cost the consumers £10 and give them 5% off every booking they make.
Why do you think the pain point you’re solving is painful enough that customers are willing to pay for your solution?
It’s win-win for the accommodation providers because we are offering just 8% commission as well as a membership scheme that we pay for. Our major challenge lies in persuading consumers to use us over the more established OTAs with huge marketing budgets.
However, our loyalty scheme will offer a discount on every property and every room type, instead of just a select few, and we will be introducing a couple of unique features to enhance the customer’s booking experience. The customer will be given the option to buy a membership at the point of purchase, and in many cases it will offer an immediate saving, making it an obvious choice.
External validation?
We have signed up more than 500 properties since we launched to the industry two and a half weeks ago, which has been a fantastic response. We already have the full range of accommodation from apartments to yurts, and five-star to campsites. This is just the beginning though, and we are on a big drive to sign up many more properties in Europe before we launch in the autumn.
Tnooz view:
"A hotelier at a recent travel event said he was putting his hotels on this site. And, it was pretty much for the promise of 8% commission, guaranteed not to change. Perhaps not so surprising then that the newbie has had 500 hotels sign up in the space of about two weeks.
At the consumer end, the incentive is discounts of 5% if you sign up and become a member by paying £10 a year. And, if the consumer pays a discounted rate, Hotel Bonanza charges less commission to the hotel.
Win-win or, does it seem to good to be true?
Many consumers will probably give it a go for the sake of £10 a year and that's the point - tempt them to try something new.
And, many hotels will give it a go, purely for the 8% because it seems like it's time for something to give in the hotel-OTA relationship.
Both of those elements should help the startup build some scale as it clearly can't compete with the marketing millions of the established online accommodation giants.
The only remaining niggle is a feeling that Hotel Bonanza is almost giving away too much. If the fairer commission level works then hoteliers will use the service and word will spread quickly. In that scenario, a hotel could pass on some of its savings to consumers and still be better off.
On the other hand, the ongoing 5% discount for a £10 annual membership will probably give consumers a sense of value.
All of that said, the startup's founders will have thought it through. They come from the hospitality industry and have been researching the market and consumer behaviour for the past couple of years.
So, is this the start of a new tier of OTAs and how will existing OTAs react?"
Pitch clip: