October 2018, Las Vegas
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When Booking Holdings gave up on pricing
Booking.com no longer wants to control the pricing strategies of small to medium hotels but why?
Booking Holdings, formerly the Priceline Group, is not alone looking to expand its net into rental cars, flights, dining, tours and activities and more. Speaking at EyeforTravel Europe about the company’s latest Fareharbor acquisition, Todd Henrich, SVP Corporate Development, confirmed that the aim is “to create a hub where customers can come to get everything they need”.
Along with Expedia and Ctrip, Booking.com is one of three global heavyweights to dominate the hotel booking landscape. So, the shift in name from Priceline to Booking is, perhaps, a sign of the firm’s strategic direction – to focus sharply on controlling the booking across all travel verticals, rather than being diverted by helping hotels to price their rooms better.
Todd Henrich, SVP Corporate Development, Booking Holdings at EyeforTravel Europe
This could also explain the firm’s decision to axe Rate Manager, one of the core products of BookingSuite, a set of revenue management and PMS tools which Priceline launched in 2015 to help hotels manage rates.
As a bit of background, when it launched in 2015, BookingSuite was viewed as a clever ploy to capture more revenue from small independent and boutique hotels. The idea was that the new division would build a hotel website free of charge, and cream off a 10% commission for any direct booking made through the new site. Then it seemed like a win-win situation. For hotels without deep pockets, it was better than having to fork out anything from 15-25% in the commissions being charged for reservations made through the OTAs. Booking.com, on the other hand, faced with its biggest clients, the gorilla chains, going all out in the direct booking war, saw an opportunity to grow its business.
It wasn’t the only one to spot a hotel tech opportunity. In late 2016, Expedia launched Rev+, its own revenue management solution for hotels. At the time, Cyril Ranque, President of Lodging Partner Services at Expedia Group, told EyeforTravel that there was a shift in thinking “from being a pure distribution platform to a being partner and enabler for the travel consumer and the entire travel industry”.
So, why axe Rate Manager now? Aside from the fact that, as BookingSuite’s note to partners earlier this year states, “we haven’t seen a sustainable level of demand in the market to encourage further investment,” could a continued focus on hotel tech, given its intensified focus to create a travel ‘hub’, as Henrich outlined, be viewed as non-core? After all, hotels are becoming ever better educated about how to drive direct bookings. And many (though still not enough!) are questioning the validity of handing over their data to powerful OTAs, just to have their pricing strategy controlled by somebody else!
Meanwhile, Booking.com is facing growing pressure from bodies in like the UK Competition and Markets Authority and the European Commission. The CMA is currently investigating the OTAs pressure-selling retail tactics, while the Commission is looking into market abuses from the likes of Google. So, Booking.com is likely considering the risk of continuing to forge overly cozy relationships with hotel partners, which it might later be accused of favouring in search!
Rumours and opportunities
The rumour mill of BookingSuite’s ‘imminent closure’ has been in full swing. In a press release announcing Van der Valk Hotels & Restaurants’ decision to implement the IDeaS revenue management system (RMS) to optimise and improve efficiency at 19 additional hotels, the group’s commercial manager, Christina Hobbel, is quoted saying: “BookingSuite’s pending withdrawal helped us focus on the need to invest in a more powerful analytics system.” After conducting an extensive market review, Hobbel believes the move bring “us closer to total revenue management and will take our demand forecasting and pricing decisions to much higher levels”.
So, while the closure of Rate Manager, which one hotelier described as one of the “only booking.com tool that was useful for hotels with limited resources, and for fair compensation,” may be a blow to BookingSuite's existing partners, RM technology providers like iDeaS, Duetto or Rategain stand to gain.
In the meantime, as its letter to partner states, BookingSuite will continue “to focus on other existing solutions as well as developing new ones to best meet the needs of our partners".
For how long, remains to seen. EyeforTravel contacted BookingSuite which has not, as yet, confirmed or denied its “imminent closure”. But as of July 31st, its hotel rate manager will be no longer.