No more than three weeks ago we alerted the hoteliers about the new initiative against direct sales that Booking.com had launched in certain countries. Well, Early Payment Benefit, as they call it, is now operational in Spain and we have witnessed its impact on the first victims in our country first-hand. If hoteliers do not do anything to avoid it, Early Payment Benefit is here to stay.
Let us give you a little background. On the 12th of last February, the alarm bells were set off when one of our clients, who operates on an international scale, informed us about strange disparities in the prices at Booking.com. Thanks to Price Seeker, we were able to confirm that indeed they were right. We started to get to the bottom of the problem and we detected that the Early Payment Benefit, the new functionality of the giant OTA, was activated.
We will not explain what it entails with too much details (you can read all about it here), we only want to remind you that it is an automatic price equalization system through unilateral discounts, which means that the hotelier will not be informed that it has been activated. In other words, when your client makes a reservation, Booking.com runs a comparison and if your official website offers a cheaper price, first, it tries to match your price and the discount is then disguised as a “discount for early payment“.
According to the information available to us, it is possible to directly request Booking.com to deactivate this new “service” which, although does not entail a direct cost for the hotelier since they deduct the difference in the price from their own commission, is of great value since it helps them improve customer loyalty, positioning themselves as the cheapest channel.
Be that as it may, we at Paraty Tech would like to share with you some recommendations that can minimize its effect as well as other initiatives that may arise that we may not be able to foresee such as this one:
- Technology, technology and technology: We want to emphasize how effective it is to have a Rate Shopper that is integrated with your booking engine and an OTA price equalizer. There are several price equalizers in the market but the only one that operates in real time is Parity Maker.
- Disparities that are beneficial to your hotel: We would like to invite you to check our blog for everything related to the different types of disparities that are beneficial to your hotel. Here is a list of some of them: more flexibility on the booking conditions and cancellation policies, payment convenience, exclusive privileges that are only available for reservations made through the official website, positive partiality on your inventory, segmentation and personalization, etc. If the price constitutes a barrier, look for other ways to differentiate yourself so that by paying the same amount, your guests can enjoy the “experience” more than the stay itself.
We were aware that the OTAs acted quickly but still we were surprised by their capacity to expand and implement their developments. Today more than ever, we are urgently asking the hoteliers to employ all the essential resources in order to meticulously control their prices in all the channels where they distribute their inventory. Technology, in short, will save you a lot of effort, time and dismay, while helping you foresee this type of actions that are harmful to your direct sales.