Booking.com (Part 1)
Booking.com say they have more than 300,000 hotels on their website...
Jackie: For this week's podcastsinenglish.com business podcast, we're looking at the rise of the OTA, in particular, Booking.com.
Richard: So Jackie, what is an OTA?
Jackie: Online Travel Agency.
Richard: And why are we looking at Booking.com in particular?
Jackie: Well, Booking.com say they have more than 300,000 hotels on their website...
Jackie: ...and it is dominating the European market, so it means that customers think that all hotels are on Booking.com so why should they go anywhere else? In turn, hotels feel if they're not on the website, they're losing out.
Richard: So are all hotels on Booking.com, then? I mean, the major chains like Marriott and including five-room hotels, for instance.
Jackie: Yes. There's a huge range of different hotels. Obviously the Hilton and the Marriotts and hotels like this, it's less essential. But Richard, if you take a smaller hotel that doesn't have any brand recognition, for them Booking.com has become the ideal digital market place to promote and sell their rooms to guests from all over the world. I mean, they have access to thousands of potential customers which they wouldn't have done otherwise.
Richard: So Booking.com, basically, is their brand and also takes er... does a lot of the marketing for the small hotels as well.
Jackie: Absolutely, and they have an amazing booking engine already set up for the hotel, so there's no need for a... a small hotel to invest in... in their own system.
Richard: So they don't need the software...
Jackie: Exactly. The Booking.com website is well organised, it's also optimised for mobiles. What can go wrong?
Richard: Fantastic. But there must be some payoff.
Jackie: Of course, they have to pay a commission somewhere between 15 and 20% to be on the site.
Richard: Well, that seems a lot.
Jackie: And in addition, Richard, they have a best price guarantee so that they say that if the hotel is on Booking.com you cannot find it on another OTA for a cheaper price.
Richard: So there's a lot of pressure then on... on these hotels to sell their rooms cheaply, and is it worth it for them?
Jackie: Well, at the end of the day, Richard, a hotel wants to fill its rooms, and the system enables hotels to be fully booked in advance.
Richard: So is it true that on this system then that um... people can make their free reservations and then cancel without losing any money?
Jackie: Yes. And some hotels have suffered enormously from this, especially the smaller hotels. People book, I don't know, three or four hotels and then they decide nearer the time which one they really want to
stay in and they just cancel and they don't have to pay any money. So there's a new system that's been set up whereby there are two rates for a room. There's a cheaper non-refundable option but those who would like the option of cancelling go for the more expensive price.
Richard: So you can book at a little bit more expensive price you are guaranteed to be able to cancel for free...
Jackie: Exactly and get all your money back.
Richard: ...but then if you pay a little bit less, you have to go to that hotel or you lose your money.
Jackie: You lose all the money. You say a little bit less, Richard, in some hotels you can get the room for up to 60% cheaper if you go for the non-refundable option.
Richard: Wow, that's great.
Jackie: So the hotels benefit by people choosing that option and so do the clients if they want to go for the refundable one.
Richard: Yep, sounds good.