Booking.com's latest promotional vehicle - Flash Deals for hotels - aims to give customers discounts on participating hotels as demand picks up. As ever, what might sound like good news for customers is likely to have painful repercussions for hotels.
These Flash Deals will take place every two weeks on fixed days, lasting for 36 hours. Customers will get 30% off a selected room and rate and have until August 2022 to use their discounted stay, according to an article published by Phocuswire.
This is a classic case of 'hidden commission' for hotels. Let's say you have a room available for $100. If you sign up for Flash Deals, that room will then sell for $70, minus an average commission rate of 20%, which would be $14. So that room ultimately earns you $56. That's like paying a 44% commission. The more you rely on OTA promotions, the more you lock your hotel into sky high commission rates for life.
While programs like these can drive up demand - and will likely feel very tempting to hoteliers who have struggled with empty hotels and seemingly endless uncertainty for the past 18 months - this certainly isn't the only option available for boosting bookings as travel demand returns.
In fact, hoteliers should think carefully about the longer term implications of signing up to Booking.com's Flash Deals. With Booking.com's typical cancellation rates close to 60%, it's fair to assume that this number could significantly increase when customers are booking spontaneous hotel stays in response to an unexpected 30% discount.
What does that mean for your hotel? You'll have damaged your own rate parity strategy while simultaneously helping Booking.com to continue to build their 'we are cheapest' brand. So while the short term benefits might look very appealing right now, there's potential to cause real pain for your hotel further down the road.
Pramodh Chukkapalli, Cluster Director of Revenue Managment at Pullman & Mercure Maldives, told us that 'all the major international chains prefer rate parity. Public direct and indirect rates should be the same. Therefore a flash sale only on Booking.com undermines the whole public distribution system.'
He explained that 'If you are going to allow flash sales on all the distribution systems then it becomes another BAR-discount rate with no value in the long run either for Booking.com or for the hotel. It is the same thing as trying to take the market share through a different rate.'
When should hotels use OTA flash sales?
There's no denying that OTAs can be helpful in terms of providing wider brand exposure - particularly for small, independent hotels who may lack the budget for large scale marketing campaigns. But while using an OTA flash sale can drive up incremental revenue for hotels, is it really worth the potential long term damage to your parity status and brand?
For smaller hotels, the ease of handing over the responsibility of organizing and promoting the flash sales to reach new audiences can seem like a fair exchange for the price of increased OTA commissions. However for their latest flash sale, Booking.com appear to be encouraging hoteliers to promote the Flash Deals though their own channels using assets the OTA has provided - which then send the hotel's potential customer straight to Booking.com.
As one hotelier asked in a LinkedIn post discussing the promotion 'Would hotels do that? Given the incremental commission payout? Wouldn’t it make sense for hotels to promote their own flash deals instead?'
The direct alternative to Booking.com's flash sales
It should come as no surprise that we agree with that sentiment here at Triptease. That's why we provide the data and tools that will enable hoteliers to run their own flash sales directly on their own websites.
A countdown message can be set up in minutes to offer any kind of discount you want to provide - no commission fee required and no future parity issues created. Given that limited time offers and flash sales are frequently built into a hotel's revenue management strategy, this offers a new way to put those deals front and center for any customer arriving on your website.
If you're concerned about losing the incremental revenue that an OTA flash sale might provide, try adding our newest smart targeting option - Conversion increase opportunity targeting - to your flash sale message. This smart targeting option analyzes a hotel's traffic and automatically targets audience segments that have a high search but low conversion rate.
These customers are searching - which shows some interest in booking your hotel - but something is holding them back and you're losing the sale. A direct flash deal could be just the right thing to convince them to book.
Rethink your metasearch ad spend when the Flash Deals are running
If you're appearing in metasearch results on days when a Booking.com Flash Deal is running for your hotel, it's highly likely that you'll be wasting money by paying to advertise the fact that you don't have the best rate available.
Get out in front of this issue by notifying your metasearch provider that you'd like to pause your spend on these days. You'll already be paying your OTA commission for the bookings that are made on these heavily discounted rooms - don't pay twice by appearing in an auction that won't secure you a direct booking.
Triptease Meta is the only service on the market that will automatically remove a hotel's direct price from the meta auction when the price is being significantly undercut by OTAs. With Flash Deals happening now (and seasonal sales on the way in just a few months) this is the time to ensure that your metasearch provider is set up to save you money and protect your brand whenever you're being undercut.
Share your experience of Flash Deals
Is your hotel participating in Booking.com's Flash Deals? Have you decided to opt out of the promotion completely? Are you running an alternative flash sale direct on your website? We'd love to hear about your experience and the impact for your hotel. Get in touch at firstname.lastname@example.org
And if you'd like to run your own direct Flash Deal on your hotel website, get in touch with the Triptease team today to discuss your strategy.