Industry Update
Opinion Article 5 October 2012

Booking.com Reveal their true face

By Georges Panayotis, President & Founder of MKG Group & Hospitality ON

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The relationship between online reservation agencies and hoteliers has already evolved to a tense partnership, and is now entering to a new phase of confrontation. The trade war among online agencies has developed practices near piracy. Addicted over the years at online bookings, hoteliers are now paying at high price, the ease in which they fell behind. And news from the front is not good!

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Having literally trampled the competition both in Paris and in the surrounding regions, Booking.com profits from their dominant position by imposing new rules on the game. To the surprise of its "partners", the site now reserves the right to automatically resell a room that one of its customers has canceled, so as not to lose commission. They block access to the customer's bank information, so that the hotel cannot claim the forfeit for no-show. They eliminate the transmission of e-mail addresses of their customers, a ridiculous practice to avoid direct contact between the hotel and the customer. This does not characterize a relationship of trust between business partners.

By hiding their customers under a virtual burka, Booking unveil their true face, more of a predator than a partner. But beware, all these practices are also indicative of the fear that its model might be undermined by technological change or the sound response of customers and hoteliers. The most hastily built walls are not the strongest. Giants with feet of clay, Booking, and those who follow their ways, have everything to fear from the will of Google or Apple to tread on its land. The e-commerce T-Rex sharpens their teeth to feed on those who interfere. No one can really predict the outcome of the fight. An opaque veil will eventually tear for the client to question the added value of a service provider that offers, in the end, the same rate as the brand website. Hoteliers can say thank you to the Best Available Rate, as long as they retain control. There are fights that should not be undertaken: after having reconquered the right to set their prices, they must regain full control of their inventory, preventing an online agency from coming to dig in the PMS without being invited.

And no doubt, Booking, Expedia, Agoda, Trivago and others do not expect a response as powerful as from the hotel groups who realize that both marketing and distribution engines were essential to run the operations. By investing heavily in brands, sales tools, and communication, they restore meaning to the customer relationship. They implement neutral tools that allow them to restore the direct link without having to compromise with community sites. Distribution is one of the major challenges in the hospitality industry that lost profitability, having transferred a portion of its sales force to greedy partners. The recent actions of Booking should open their eyes and raise a welcoming insurrection among hoteliers. They missed the first steps of the Internet and had to run behind the pioneers to catch up. Now hoteliers must not miss the opportunities of mobile tools and smart partnerships with new actors. Coupled with the revaluation of brands, new distribution channel will enhance the interest of the franchise. And I bet in this field, the hoteliers have all the chances to win the fight.

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Georges Panayotis

Georges Panayotis is the President & Founder of MKG Group & Hospitality ON. Born into a family of hoteliers, Georges Panayotis left Greece at the age of 18 to study Political Science and earn a management degree at the University of Paris, Dauphine. In 1986 he created his own company and started developing specialised marketing tools for the hotel industry.

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