Booking.com has recently rolled out a new feature called Early Payment Benefit in some hotels outside Spain. Disguised as an improvement on the price for paying in advance, as the name suggests, it is, in fact, an automatic system that offers discounts in order to settle negative disparities with other channels, including direct sales from the official website.
How the Early Payment Benefit works
Explaining how it works is quite simple and hoteliers will be familiar with it since it does not stray too far from the solutions that they themselves implement to battle against OTAs. In a nutshell, Booking.com‘s Early Payment Benefit is no more than an automatic price equalization system through unilateral discounts that are offered when they detect a significant disparity in another channel, including the official website of the hotel. In other words, when they show the price to the users, they run a comparison to find cheaper channels. If they do find a lower price, they offer a discount to remain as the channel with the best online price and thus making sure the user books through the OTA.
- Where it works: Dubai, Chile or Argentina… It’s hard to pinpoint exactly where. Not yet in Spain, but we must be attentive because it can arrive anytime soon.
- Who is affected: only certain hotels with the option of payment through Credit Cards, and not in all searches.
- How much does it cost for the hotelier: Booking.com deducts the amount of the discount on its own commission. Their clients pay 100% of the booking and the hotelier only gets charged for the POS commission (2.5%) when the payment is paid with the credit card.
How to know if Early Payment Benefit has been activated on your establishment
The best way to detect it is to keep a comprehensive control of prices and disparities by using a Rate Shopper. For instance, the alarm bells were set off when one of our international clients informed us that Price Seeker v3 was not showing prices from Booking.com correctly.
Initially, it was very easy for us to confirm through the screen captures provided by the tool and by doing manual searches. Apparently, everything was in order. The prices matched those on the screenshots. However, our client insisted that on various occasions, that has not been the case.
We started to get to the bottom of the problem so we could understand the root of the errors and we decided to validate by launching a series of consecutive searches for the same hotel and the same dates. That’s when we discovered something unexpected. We often received different prices from Booking.com and we knew that our client had not made any changes.
How to battle against Early Payment Benefit
There are different ways of dealing with Booking.com’s new strategy. First of all, as we said, you have to detect if it has been activated on your hotel or establishment. Once you have identified “the problem”, we at Paraty Tech suggest various alternatives:
- The first and the simplest is to directly request Booking.com to deactivate this functionality by contacting its Customer Service.
- Another option is to implement a price equalizer with OTAs that allows the prices shown by the booking engine of the official website to change in real time. Parity Maker, for example, is capable of doing this according to a certain pre-configured business rule. It guarantees to position the official website as the cheapest channel.
- We also recommend adding exclusive privileges to the rooms that are only available in the direct sales channel. If you can not compete with the price, you will have to provide distinctive value to the reservations made through the official website. The idea is that, by paying the same amount, the customers enjoy a more complete experience: flexible conditions, additional services, exclusive advantages, etc. Whenever we talk about disparities it seems that only those related to price are taken into consideration, but there are other forms of disparity that we can turn into strengths.
Parity Maker vs Early Payment Benefit
Parity Maker is our real-time price equalizer. Completely integrated with the booking engine of the official website, it allows the hotelier to configure a business rule that determines when the tool should take action. Like Early Payment Benefit, Parity Maker runs a comparison in the background while showing the user their search results. If the requirements of the established business rule for the same search parameters match the same conditions in the selected OTA, Parity Maker reduces the price in real time. The user is informed of the price improvement that has been applied through animation and an alert popup. In this way, on the one hand, it guarantees the best online price and, on the other, it prevents the user from leaving the official website to compare with other channels.
Example of a Parity Maker business rule: Match my price with Expedia.com when it is 5% cheaper than my official website
Nowadays, the importance of having a powerful and reliable price comparison tool for a revenue manager is indisputable. It is the only possible way to stay one step ahead of the market when it comes to making decisions, as well as identifying situations, like the one we are dealing with at the moment, and ultimately, addressing them with quickly and effectively.
Price Seeker v3, our own Rate Shopper is already able to detect Early Payment Benefit. We are currently working on the tool’s functionality to inform the user about the nature of the disparity detected, monitoring the price before and after the discount has been offered. By combining Price Seeker v3 and Parity Maker, we can downgrade Booking.com’s latest strategy.
All signs suggest that the OTAs have no intention of losing the head-to-head battle against direct bookings. They are quite aware that the current action plan of hotel establishments involves the most advanced technology and the best professionals, making them the OTA’s main contender, the rival who continues to invest in resources in order to claim their rightful share.
The e-commerce giant Booking.com continues to show signs that they are threatened by the hoteliers, which is actually a good indicator that the latter must be doing something right.