Booking Only Sites – Are they the way of the future?
Booking only sites have been around for many years but have become more prominent in the last year or so. Sites like Wotif.com, Agoda and Booking.com provide a commission only option for those tourism operators mainly in the accommodation sector.
Typical commission rates are about 15% (and rising) for a confirmed booking. While this type of marketing is attractive as it's a pay as you go model, there are some things to consider.
- The commission you pay typically ends up going to an overseas company.
- If you rely heavily on booking only sites, you may be putting 'all of your eggs in one basket'.
- Pushing up your prices to cover the commission risks disgruntled travellers who may see different prices on display elsewhere (also many booking only sites lock you into set pricing via the contract you sign with them).
- Booking only sites have no travel information and just basic details about your business. They are typically the 'last piece of the puzzle' and get the credit for the sale (even though the traveller probably started at our site or yours
- Have you searched on your name in Google lately? You probably come up 1st in the organic search but booking only sites often place paid Google adwords based on your business name. This means they will attract the traveller with 'best deal, great rates etc'. You may get the booking but you'll be paying a commission when you could have got the booking directly via your web site. Also there's no guarantee you'll get the booking site reservation as the traveller may simply choose somewhere else to stay. How do you feel about your brand being used in this way.
"Price fixing by the major hotel chains and OTAs means that commissions have been steadily rising, driving up room rates. By consequence, there is a growing disconnect between the price the guest actually pays and what the hotel receives." Professor Peter O'Connor, ESSEC Business School
"Many OTAs have also launched preferred programs for hotels to show up higher in the sort order. Hotels should be careful not to simply drive up their costs and at the same time become reliant or even dependent on OTAs. Keep in mind, their only mission is to grow in terms of global revenue, and that is not always in the best interest of the Industry." John Smith, TravelCarma
Read a couple of articles on the subject especially around increases in commission rates (most articles are about hotels however the same rules apply to other accommodation providers):http://www.traveltrends.biz/ttn555-checking-back-in-collapsed-website-revived-with-former-md-in-consulting-role/
Booking only sites are definitely here to stay and are a valid marketing vehicle however relying on them as the main source of your bookings is a risk. New Zealand Tourism Guide also have a booking option but it's only part of the mix of options available to travellers – the vast majority prefer to click through to your site and book direct.
Spread your Marketing
It's important to market your business wisely and to use a good mix of viable options. Weigh these up on a case by case basis.
We've used ourselves (New Zealand Tourism Guide) to highlight a few things:
- No commission is payable. You keep the full rate. The aim is to get travellers to your web site, to call you on the phone or to email you directly.
- Being seen on our site will have a knock on affect and many travellers will then search for you on booking only sites to try and get the 'best price'. Traveller review sites like TripAdvisor benefit in the same way.
- Your business is branded on the site. This shouldn't be under-estimated as word of mouth and recommendations are powerful.
- Travellers plan their travel on our site from this weekend to 12 months in advance.
- Your listing will be exposed to approx 150,000 NZ and 150,000 international travellers who visit the site every month. This is an excellent marketing mix. If you aren't listed travellers will view other businesses instead.
Working it Out
Based on two years of bookings through the booking site BookIt.
|Average Booking Value||$250 per booking (a tour or 2 days accommodation)
|Booking Amount taken||$37 per booking|
|NZ Tourism Guide Listing|
|Average # of leads per mth||41 per mth (includes click thru's, calls and email enquiries)|
|Average leads conversion rate||10% (high quality targeted traveller leads)|
|Number of bookings per mth||4.1 (no commission – book via phone, email, your own site)|
|Cost of Gold Listing per mth||$55 inc GST (most popular listing)|
|| Based 4.1 bookings per month
|Booking Site cost per mth||$151|
|NZ Tourism Guide cost per mth||$55 (equivalent cost for 4.1 bookings)
These are averages but hopefully gives you food for thought.
Call us directly on 0800 146 551, contact us, or talk to your tourism consultant for more info.