Recently, booking.com has launched a new program for hoteliers called 'Risk Free Reservations' with which seeks to ensure the sale of non-refundable rates. Here, we want to explain why you should avoid this program.
Booking.com has just launched a new program called 'Risk Free Reservations' designed supposedly to enhance hotel sales, avoiding the risks of cancellations. Summing up, the application of this new program will allow Booking.com customers to see non-refundable bookings as free cancellation bookings.
Thus, with this new option, if you offered in Booking.com one flexible rate and one non-refundable rate - being the first most expensive -, from now on the user will see two different prices with the same conditions (since the rate that was initially non-refundable will become free cancellation for the customer)
, who logically will choose the lower one, with the difference that the hotel supposedly ensures that another client will occupy this room or that booking.com itself will pay for the reservation.
What will happen with this is that you will lower the average price since practically the total of your reservations from booking.com will be at a Non-refundable price
But the worst consequence is that you will be offering to booking.com the best prices and market conditions, favoring this channel over the rest - including your own channel
. If until now you had price parity, what the user saw was the following:
On the other hand, if you accept to be part of the program 'Risk Free Reservations', what the user will see from now on will be the following:
When you put it like this, who wouldn’t book through booking.com? That is to say, whe the user would like to book your hotel will only consider Booking.com. With this action, you are not generating new sales, but you are moving sales away from other channels, including your own website, and leading them towards Booking.com.
Therefore, not only is the average price going down, but the costs of distribution are increasing by offering all the advantages to a channel that reduces considerably your net profit. As we already saw in a previous pill, the difference in net benefit can reach 14%.
Meanwhile, booking.com is also getting the quota of your rooms, offering the possibility of having your rooms when no one else has them, even your own channel. Doesn’t this remind you of the classic tour operation and its guarantees?
Another point that booking doesn’t mention is which sort of client will they chose in case of cancellation. It doesn’t confirm if it will be for the same type room, occupation, board or if any of these variables can be modified without the hotelier's permission.
Finding the balance in the distribution that offers the best return is not easy, but the only option to achieve this is to have control over the distribution of your rooms, and clearly with actions like this, we are giving this control away to a third party.