Booking Holdings confirmed that it was to scrap the rate management tool in its BookingSuite product.
The move was taken as a sign by some observers as an indication that hotels’ direct booking strategies were being successful and that hotels were becoming more sophisticated in their sales strategies.
RateManager was used to help hotels and accommodation owners anticipate demand shifts and set the best rates for the best days and times, based on demand and competition in the area.
Booking Holdings told Hotel Analyst: “As part of our commitment to continuous learning and innovation, we are going to continue our efforts in products where we see significantly more demand in the market. This includes our other existing BookingSuite solutions as well as developing new ones to best meet the needs of our partners.”
Booking would not be drawn deeper into the reasoning for its decision. Michael McCartan, managing director, EMEA, Duetto, told us: “In my opinion this is because hotels have resisted putting all their eggs in one basket. Hotels are already too dependent on OTAs for business and by allowing them to see 100% of business and influence the pricing – where and how they sell, and segment and promote their rates, ultimately could mean hotels giving up the keys to their business to the OTAs. I think the bigger hotels have more to lose and have therefore resisted going down this path which may be one reason why the adoption of RateManger has been unsuccessful.
“We did reach out to BookingSuite to support them and give their customers a home for revenue management, but they never really responded. However, hotels have actually found us, as we have signed up quite a few, especially in Europe. Swiss Quality Hotels is an example of that.
“Hotels are understanding that in order to compete with OTAs they need to have a deeper relationship with the guest, particularly with the returning guest, and give them a reason to book direct. Personalised pricing is one of the most effective ways to do that.
“You need to recognise the person and give them an offering that is unique to that person based on preferences and historic spend, incorporate the current market situation at the hotel in terms of demand, and triangulate those three things to offer something unique they can’t find somewhere else to create a package that is specific to them and right for the hotel. It’s about providing the right offer, at the right price, at the right time to the right person. To do that you need a lot of system integration; you need a platform like Duetto to manage a segment of one to price every person or group of similar individuals independently. We have the ability to do that and working with partners to complete the full booking path.
“Hotels have to understand that the company is no longer the flower, the guest is the flower and we are the bees. We have to go where the customer is. The customer is looking for relevance, convenient and recognition and that’s what personalisation does. You’ve got to go where the customer is and make yourself attractive to them.
“For me, convenience and relevance are the new loyalty. Personalised pricing and merchandising is at the heart of this principal.”
Duetto was not alone. Ideas announced that Van der Valk Hotels & Restaurants had switched from BookingSuite to its own products, with greater control given as one of the reasons for making the switch.
Christina Hobbel, commercial manager at Van der Valk International, said: “Some features that caught our eye were the yielding on total business mix, inventory controls and length-of-stay restrictions – that’s something we’ve wanted for a while. We try to provide a total package so our guests have no need to leave their hotel. Implementing Ideas’ RMS frees our front office staff from worrying about revenue – instead they’ll be able to make our guest experience even better and upsell products and services when necessary.”
HA Perspective [by Katherine Doggrell]: The OTAs have been positioning themselves as the hotels’ friend, here to help in the frightening world of the internet, a world in which they have been happy to lead them by the hand into sales at the kind of commission level which would set off enough bells for a lifetime of tinnitus.
Hotels worked out that wasn’t all OK and the frenemies found themselves working together, albeit uneasily. Booking was not the only OTA to launch a raft of helpful tools. Expedia Group has Rev+, “a revenue management tool designed to provide hotel partners with smart, actionable data and insights”. And these tools make sense – the OTAs are, after all, sitting on a data goldmine and, like Facebook, Twitter and all the rest, they are bound to monetise it.
What sparked Booking’s decision to pull back remains unclear. Whether it was concerns over the what happened at Facebook making hotels wary of their data partners, a change in direction or just hotels finding a better offer elsewhere. What the OTAs are starting to notice is that the hotels are doing it for themselves, either creating software in house in the case of Skytouch, working with others – at IHG with Amadeus – buying the company (AccorHotels, of course) or cherry-picking solutions as with suppliers such as Ideas and Duetto. Hotels are more savvy than they were when the OTAs first appeared on the scene.
Not limitlessly so, according to McCartan, who added: “Look at the ‘book direct’ campaigns of the big brands. Statistics suggest they have been successful but at a cost. Offering an unsubstantiated 10% discount, for example, is fine for getting people to the hotel but is it diluting profit? There’s sufficient research out there to suggest that is happening. While loyalty membership is going up its not helping the hotel owner, who’s desired outcome is to drive profit. Loyalty campaigns have been successful on one level but detrimental on another level, hotels will only win when they are able to drive direct bookings at a rate that make sense to the business and that are reflective of the value of the guest to that business – not everyone deserves a 10% discount.”
The OTAs still win the scale battle. But the war is becoming ever-more nuanced.
Additional comment [by Andrew Sangster]: It seems highly unlikely that Booking has binned its rate management tool because of the success of the book direct campaigns by hoteliers. Given the huge resources at Booking’s disposal a more probable response would have been to inject even more energy to making it work.
If not capitulation in the face of the hotelier fightback (writing it down makes it pretty obvious that this isn’t the reason) then I would suggest the options are either that Booking felt there was no interest in the tool or it was worried about attracting attention from competition authorities.
Since a number of vendors are leaping into the void left by the rate management tool departing the scene, the absence of demand is also an improbable reason. Certainly, not handing over even more data to the OTAs is a good reason not to sign-up but I doubt that has led many hoteliers to avoid the product given that Booking has the widest spread of hotel supply (along with Expedia) in the market and ought to be able to offer a very effective tool.
So the lawyers (as is so often the case) are the winners here. If you are a key retail outlet, anything that looks like you are enabling prices to be maximised by your suppliers is going to be tricky. A rate management tool is just such a thing, and I’m sure Booking’s legal department has been on tenterhooks ever since it heard about the product.
The axing of the rate management tool is great news for the vendor community as it looked at one point that the OTAs were going to start offering many of the services currently offered elsewhere, often making these services available for free or at highly subsidised rates to lock hoteliers into the OTA system. That threat does appear to have receded with the BookingSuite news.
For hoteliers, the impact is more nuanced. They can breathe a sigh of relief that OTAs are not swooping in to take complete control of distribution but there remains the small matter of working out how to do the job properly themselves.