Direct booking is in the spotlight as two giant hotel chains make it a major focus for their promotions and upset the Priceline Group boss. This has big implications for vacation rental owners who use online travel agents and listing sites.
The ability to take a direct booking from a guest, bypassing the online travel agents (OTAs) and listing sites, should be a mainstay of the independent vacation rental owner’s business. Online travel agents and listing sites dislike the practice for obvious reasons and prefer guests to book through them.
Hotel offered lower rates direct
The issue came to a head recently when hotel chain giant Hilton Worldwide made a major push for direct bookings and offered their loyalty program members lower rates than they could get from the online travel agents. Last month Hilton Worldwide launched a major ad campaign entitled Stop Clicking Around which promotes the idea of booking direct over booking via an online travel agent.
Although not so forthright in its promotion of direct booking, the Marriott chain also offers a ‘best rate guarantee’ to its Marriott Rewards members and has publicized these rates on its own sites for over a year.
CEO of the Priceline Group, Daren Huston, is on record as saying: ‘I don’t appreciate some of the actions that are taken on a chain level sometimes…’
The Priceline Group describes itself as the world leader in online travel and related services. It’s the umbrella for a host of big industry brands including the online travel agents Booking.com, priceline.com, agoda.com and travel search engine Kayak.
Reclaiming its market share from online travel agents
In a later report, Skift described Hilton’s ad campaign as ‘Another firing shot in Hilton’s battle to reclaim its market share from third-party distribution channels’.
‘By touting the benefits of booking direct and bypassing sites like Expedia and Booking.com, Hilton is going after rate parity and most-favored nation clauses,’ they commented. ‘And attempting to collect revenue that would otherwise go toward commissions paid to third-party sites and travel agents.’
Commissions are at the center
So, lost commissions are at the center of this issue! As with rates paid by vacation rental owners, those commissions can be as much as 10 to 30 percent. But the online travel agents loss is the property owner’s gain – in this case the hotel chain. But it could equally well apply to a vacation rental owner with their own website and direct payment facility.
The issue of direct booking has been bubbling up for some time. Back in August last year, I asked how the so-called rate parity legislation in Europe (effectively, the direct booking issue) might affect vacation rental owners.
At that time, I wrote: ‘Under the new regulations, hotels will no longer be expected to offer the same rates through all booking sites. Instead, they will be able offer different rates to different online travel agents, as they choose. And, it seems that they will also be able to offer yet another different rate to direct callers on the phone. Which raises the possibility of guests in the know ringing the hotel and booking direct for a cheaper stay.’
Unpopular guest fee
We can learn from these recent developments between Priceline and the hotel groups as it’s pretty much the situation vacation rental owners are in with major listing sites and online travel agents. And with the likes of HomeAway imposing an unpopular guest fee, owners should be looking at ways of retaining their independence.
If I were an owner new to the business I’d be looking to set up my own website and direct payment facility before I signed up to any listing site or online travel agent. That way I’d be more in control of my property and would get to keep more of my rental income. With the help of a good property management software (PMS) service it can be done quickly and easily and will pay for itself several times over.