During the pandemic, many hotels
have seen their direct
sales grow exponentially within their channel mix. Meanwhile, on the sly,
Booking.com has also managed to increase its share with almost no resistance.
Given the current situation, where many channels are still not appearing and we
don’t know if they will be activated this season, Booking.com has become the
basket where most of your distribution eggs are stored.
How is Booking.com doing this? In this post we
analyze some of the practices implemented by the OTA and how you can compete
How Booking.com follows in Expedia’s footsteps
If there has been a hot topic among hoteliers over the
last five years, it has undoubtedly revolved around Booking.com’s famous
virtual cards and their online payment.
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Seen as a “non-refundable” charging model, taking
advantage of the wish of cash and easing the process to charge customers whose
cards were not accepted by the hotel, many hoteliers decided to activate
Booking.com’s online payment model at the cost of a relevant (and additional)
chunk of commission.
A brilliant idea until the pandemic “allowed” Booking.com
to unilaterally relax its customers’ non-refundable bookings and all that cash
flew away. A warning of what could happen in the future.
In another turn of the screw, hotels can use
Booking.com’s online payment to receive prepayment on their bookings
(refundable or non-refundable) and generate some cash. Music to our ears? In
reality, what this means is that Booking.com is moving to the merchant model,
charging the booking themselves, and gaining the capacity to undercut prices,
playing the old game of net vs. final prices. In other words, if you play
with Booking.com’s online payment model, they will play with their margin to
offer more attractive rates than your direct channel.
If you thought Booking.com Basic was already
messing up your OTA pricing, you can now add a second program that moves a
little farther away from Booking.com’s traditional agency model. In your battle
to control your prices against Expedia, Hotelbeds and other bed banks, you are
opening the door to the most dangerous opponent. Are you sure this is the right
Preferred Plus - Higher, stronger and much more
Another new feature the pandemic brought is the
option (only available to a select group of hotels, according to Booking.com)
to join their brand new Preferred Plus program.
This is not the first time that Booking.com has sold
us one of its programs as exclusive and limited, as Genius was born in a
similar vein of only being available to the best customers. Today that
exclusivity is gone and nowadays you don’t even need to be registered to see
Genius prices (not only on their website, but also on those of third
Although it sounds very appealing, it is only after
taking a closer look at what this Preferred program is all about that one can
realize that not all that glitters is gold:
- For an extra 5% commission (on
the RRP including taxes) Booking.com promises a 74% increase in visibility over
Preferred and up to 30% more bookings. Curious to see how, indirectly,
Booking.com says the traffic you will get is of low quality (+74% in traffic
versus +30% in bookings).
- The OTA does not explain how the
hotel’s visibility is affected and how you are going to achieve it. Currently,
in any destination search, hotels that are not “preferred” appear above the
hotels participating in both versions of the program.
- In addition to the 22%
commission, Booking.com will offer credit to customers who book at your hotel
to later book any other hotel in the OTA. A perfect plan - for Booking.com
not for you. By joining Booking.com’s Preferred Plus program you are increasing
Booking.com’s margin and, with it, its ability to undercut your direct
channel. This move is potentially very dangerous as Booking.com will move
your loyal customers away from your direct channel and as the OTA can offer
better prices than you.
- At no point will Booking.com
break down which bookings have been generated by this increased visibility, and
the increase of the commission will be applied to all your
Booking.com sales. That means you have no way of measuring whether the increase
in cost pays off. But even believing Booking.com’s hypotheses, numbers don’t
add up. Would you pay 42.53% commission on these additional sales? That is
exactly what you would be doing when joining the Preferred Plus program.
The globalization of your “opaque” prices
Most hotels have already been notified in the last
few days that their Genius rates (increasingly less opaque) will also be
available on the booking engines of their partners and affiliates (agencies,
other OTAs, airlines, etc.).
The news comes after expanding its special pricing
program to all those who have an account with Booking.com. According to the
latest news, your prices will now be available by default on the following
- Booking Holdings group (Priceline, Agoda, Kayak, etc.)
- Dot-com partners, such as corporate
- Metasearch engines such as
Google and Trivago
In other words, if you don’t take action, your
hotel’s Genius rate will now be available throughout Booking’s network of
affiliates and partners (as is the case with some OTAs).
A real-life example: A customer books your
hotel on getaroom.com with a discounted Genius rate and the booking comes to
you through Booking.com, with instructions for online payment. We lose all
price traceability of Booking.com and it becomes just another middleman (and
like all of them, hard to control).
Remember, Genius has three levels and applies
discounts between 10% and 20%. Now these rates are “out there.” What a smart
and Machiavellian change of concept compared to the original idea behind
Changes to the general contract
This is undoubtedly one of the changes that went
unnoticed by many hotels and which clearly shows how Booking.com operates in
times of crisis. At the end of 2020, Booking.com sent its customers a change to
the general terms and conditions (also unilaterally) where it focused
particularly on the clauses relating to parity with the direct channel. This is
nothing new, but it is worth highlighting three points:
- They do not apply to prices
distributed to other OTAs. Booking.com knows that direct sales are its rival,
and this is where it wants to keep hotels on a leash.
- It warns that they will lower
the RRP on Booking.com online payment bookings as an “incentive” and will bear
the cost themselves.
- All parity clauses do not apply
to hotels located in wide parity or non-parity. There’s still hope for the
During the pandemic Booking.com has had few rivals
when it comes to selling hotels, the only ones that have come close (and even
surpassed them in some cases) have been the hotel’s direct sales (either
online, via email or telephone).
The new clauses pave the way to protect its
new intermediary model (redistributing rates across its network and with an
agency payment model).
Risk-free reservation - for Booking.com, of course
It is common practice for Booking.com to use any
argument, no matter how ridiculous, in its best interest. If there is one point
that most hotels are in complete agreement about Booking.com, it is the high
number of cancellations for the flexible rate.
Add this to the uncertainty of
the different markets during the pandemic, the price swings and the current
conditions for trying to keep up with surges in customer demand and standstill,
and you have a staggering volume of cancellations.
It is in this context that Booking.com has decided
to revive the Risk-Free Reservations (or hold my drink) program. Back in 2018 we explained this program in detail, which has been lurking for
some time. What is new is that Booking has decided to unilaterally activate the
program for many hotels.
There is the option to deactivate this program (and
other interesting options that we suggest you consider) in the Booking.com
extranet if your hotel has been automatically activated and you were not aware
The premise seems interesting as it aims to ensure
that Booking.com bookings are paid for, due to the high cancellation rate
(although the program states that customers hardly ever use it). But the hotels
concerned had already published non-refundable rates that protect their
What does this program really represent?
- Booking.com unilaterally decides
what to do with your prices and conditions of sale (dumping and policy
- Potentially, a large proportion
of the sales you are going to generate on Booking will be taken away from your
own website (current demand is unfortunately limited, once the customer already
knows which hotel they want to go to it becomes a fight between channels, and
you will be giving the sword to Booking while you are left with a fork for
- A majority of your Booking’s
sales will come in as flexible at the expense of your price parity.
- If a room is no longer
available, Booking.com will be exempted from paying the total amount of the
- Your website will be at a
disadvantage compared to Booking.com (not only in prices but also in
cancellation policy), and the hard work done during these months could be
ruined in a short space of time.
See if there is something you can do on your own
website that will help you boost sales without impacting your pricing and help
you keep control of your inventory.
Booking.com customer loyalty - the ultimate goal
Booking.com has long been promoting various actions
to build loyalty among its (your) customers. In this post we are only looking
at a small fraction of them.
Strangely enough, this club is financed by the
hoteliers, giving Booking.com a competitive advantage instead of investing in their own loyalty programs that
would help strengthen the relationship of your customers with your hotel. Some examples we have seen recently include credit for future bookings, promo codes with discounts or free taxis.
It is of course legitimate for any platform to try
to build customer loyalty in order to retain customers in the future. We’ve
always said that it is much more effective to manage and draw from existing
demand than to generate new demand. But many hoteliers do not see the
benefit of investing in their own programs or attractive customer benefits on
their website while subsidizing those of third parties.
Booking.com knows the importance of customer loyalty
(which it will always protect above hotels), but it also knows that it needs
the hotels to increase its sales. So, we have also seen various actions that
aim to incentivize hoteliers to sell (even) more on Booking.com:
- Savings on commissions for each registration you refer to Booking.com (you make
their sales and recruiting work easier for €200).
- Discounts on commission during the summer (which, remember, has already gone up if
you have accepted their Preferred Plus program). What does this mean?
Booking.com will pay you a volume discount if you exceed a sales target. This
discount is 30% commission on the difference between the total sales and the
sales target for those months (interesting that Preferred Plus is applied to
the total and not to the difference in sales increase as a result of the program).
A discount on the commission sounds good, but there
are two requirements to join the program - 10% mobile discount and Active Flexible Rate.
Booking Holdings, in their Q4 2020 results,
published that two-thirds of all room nights were booked on a mobile device
(especially on the app). So, we can assume that on average 66% of sales could
be with a mobile discount. In other words, our mobile rate has become the BAR
and the price at which everyone can access, and we have already reduced it by
If you meet your target by selling more through the
mobile channel at a lower price you will have needed more stays, and your ADR
will be affected and therefore your revenue. The question, therefore, is not
how much can I save on my bill by joining the program, but how much more will
it cost me to belong to it.
If you compare what you may be losing in terms of
revenue from your direct sales and realize that the advantages always seem to
benefit them, you will realize that the only one that these programs really pay
off for is Booking.com.
Some easy solutions
We’ve recently explained some actions to maintain or grow your direct sales
after the pandemic, many of them can be applied to what we are
discussing today. Only you can regulate your relationship with Booking.com and
determine how much they will control your prices.
Remember, as you grow your
direct sales share (whether online or through other channels), you gain
independence and control over your inventory, as well as increasing your
hotel’s revenue. Our different leveled recommendations (we recognize the
“fear” of taking these steps):
- Desired: Use
Booking.com exclusively on its “Pay at hotel” model and dispense with the
Genius or Preferred program. Your website should always have the best possible
sales conditions (mobile discount, differential, etc.), a good loyalty club and
- Favorable: Deactivate
the Online Payment option and prevent Booking.com from dumping your RRP. Limit
distributing your prices through third parties (you can limit this option
within the extranet in the Genius “Choose your customers” section). If you keep
the Genius program, you can build loyalty among your direct customers with a
bigger discount. Decide whether the incentive actions offered by Booking
compensate you at the cost of your direct sales.
- Minimum: Any
action you take with Booking.com must at least be
replicated on your website.
We’re living in a time of uncertainty never seen
before in the sector, as well as a change in the paradigm of online shopping in
the wake of the pandemic, and Booking.com knows it.
Fighting for its own survival and growth in hotel
distribution, it has not hesitated to pull out its heaviest artillery and take
advantage of the hotelier’s need at a moment of great crisis. This has meant a
significant increase of the channel in the hotel channel mix, where in most
cases, it is the undisputed number one, giving it more power and freedom to
impose its own conditions on hotels.
It is understandable to pull out all the stops in
order to overcome the current crisis and try to generate as many sales as
possible. But you also have to keep a cool head and crunch the numbers, because
small actions with a lower investment cost in the direct channel can lead to a
There are interesting tools on Booking.com that you can try, but
you can also deactivate them if the numbers simply don’t add up. Adjust the relationship
with Booking.com according to your needs without letting it drive your hotel’s
sales and taking actions on your behalf that you can do yourself at a lower
About the author...
Marta Romero is an account manager at Mirai
Booking.com asked that their feedback be shared in response to the opinion piece above - which we are happy to do.
- “Nowadays you don’t even need to be registered to see Genius prices...” This is patently false. While we did expand our Genius program earlier this year, we’re bringing the great value of the program’s Level 1 benefits to all account holders - not just anyone on the platform and you do have to be signed in to see them, including on any other platform.
- Generally on Preferred Plus, this is a substantial mischaracterization of the program and its mechanic. First, the program is completely in line with our relentless efforts to bring additional demand to our partners during this challenging time. With this new tier of the program, properties do pay slightly higher commission than the Preferred Program for the extra visibility that comes with being a 'Preferred Plus' partner but this additional commission is passed directly on to our customers in the form of a trip credit to put towards a future stay. The extra commission is passed onto the consumer directly in the form of credit to incentivize them to hit the book button and land the partner additional bookings.
- Further, the calculations seem dubious at best and partners are absolutely not paying 42.53% for our services.
It is also worth noting that Booking.com does not believe in providing just any accommodation with the ability to simply pay for a top slot in the search results on our platform. Our priority is to ensure the absolute best customer experience, so we ultimately only showcase properties in these programs that consistently provide a great guest experience to our customers.
- In the section detailing GDT changes, the narrative is a bit confusing but it reads as though the author is stating that we changed clauses related to parity, but then that this is nothing new. We do proactively inform our partners of updates to our General Delivery Terms (GDTs). These are made periodically to ensure Booking.comcan continue to innovate our products and services in order to continue delivering value and driving business to our partners in the future. This is all part of our commitment to building a strong and open partnership with our accommodation providers. We made these updates in December 2020 to bring enhanced clarity to key areas, including compliance and ethics expectations, how we’re approaching the security of online payments and how we will handle communication and impact of potential future government charges e may have to implement - but the changes highlighted in the piece don’t align to these buckets.
- “What is new is that Booking has decided to unilaterally activate the [Risk-Free Reservations] program for many hotels” and with this program “Booking.com unilaterally decides what to do with your prices and conditions of sale.” While our approach to pricing and policies on our platform is rooted in bringing the best value to our customers, we’re equally committed to supporting our partners and their pricing strategy, which they are in complete control of and we do not unilaterally make decisions partners’ prices and conditions of sale.
- More specifically on the program, we know that now, more than ever, travelers are looking for flexibility. It is a huge piece of what they look for when they book nowadays and as we aim to bring demand to our partners in every way possible, we want to ensure they are able to capitalize on this interest on our platform, while also ultimately respecting the policies of our partners.
- Further, specific to the program, if a customer cancels a booking under this policy, we will find a new guest for the property or we will take over the payment obligation - ensuring partners don’t feel impact to their revenue.