In trendsBooking

Michael Borge, MD (Scandinavia)

In September 2012 I wrote a blog post about how booking for most Scandinavian DMOs was a losing game, both in terms of profit (loss) and in terms of market share (falling).  I went on to state that most DMOs lose their market share to the big OTAs like Expedia.com (hotels.com) and Priceline.com (booking.com).  Even the large cities in Scandinavia like Stockholm, Copenhagen and Oslo struggle to make their booking business profitable.  

Now, more than a year later, the picture is even clearer. Priceline, who owns booking.com, increased their booking volume by almost 90% last year. Expedia increased their volume by approximately 30%.

It is almost impossible for DMOs to compete with these large OTAs that continuously are the biggest spenders on Google Adwords and advertising in general. Tourism is a truly international business and as consumers we do have a world-wide view when we are thinking about vacation. Hence, recognisable booking engines like booking.com and hotels.com feel safe. By safe I mean trustworthy of my money and recognisable wherever I book in the world. A DMO website with booking will need to overcome the barrier of making the customer feel safe – every time.

It is a losing battle and the winner is…. not the DMO.

Why does a DMO want booking on their site?

Well, in the beginning it was a good source of income and at the same time it represented a service to its members and to the consumers. As the income is being reduced to a point where many DMOs actually starts running a deficit it is time to rethink.

How can a DMO uphold the booking service to their providers and to the consumer?

To answer this I think we have to answer two other questions.

  • What does the consumer want?
  • What does the provider want?

The consumers want best price. They want it to be safe. They want it to be easy.

The provider would like: More bookings, ease of use, lower commissions.

The large OTAs have succeeded in meeting many of these demands. However low commission is one area where there has been some controversy. In fact, many hotel chains in Scandinavia have discontinued their partnership with hotels.com for this very reason. They became too powerful and took a much too high commission. But still, there are many hotels and accommodation providers that continue to use hotels.com. This proves that a high degree of price elasticity is ok as long as the two other criteria are met; booking volume and ease of use.

If you can’t beat them, join them. 

A well-known proverb stemming from one of James E. Watson’s favorite sayings: “If you can’t lick’em, jine’em”. He was a US Senator in the 1930’s.

This is where the polling engine comes in. The polling engine essentially retrieves price and capacity from many different sources and displays the result for the consumer.  In this way the consumer can, at a glance, see what booking.com, hotels.com, laterooms.com and other sources charges for a particular room, cabin or any other accommodation.  When the consumer decides on one of them he or she will leave the primary page and enter in to the familiar booking process of one of the above mentioned OTAs and at their site completing the booking.

A solution like this will deliver on the needs of the consumer (best price, safe and easy) and most of the needs of a provider (more bookings and ease of use).

So, what’s in it for the DMO?

Since one of the most important jobs for a DMO is to make sure that its members/providers flourish, this solution will contribute to that.  Also, the solution makes it easier to become bookable on the DMO website. The provider does not need to enter his or her prices and availability in yet another system only to be used on the DMO website because the DMO is accessing this information from existing distribution channels through the polling engine solution.

In addition to meeting the needs of both members/providers and consumers, the DMO will have the privilege of associating themselves with great international brands like booking.com, hotels.com, laterooms.com, etc.

The polling engine represents an easy and a “no problem solution” for a DMO. However, one could not expect a great deal of return commission from the mainstream bookable providers.

Maybe the DMO should look for helping other types of providers to become bookable online. What is done for activity providers for example? A “booking.com” for activity providers does not exist – yet. Might that be an area where the DMO can make a difference? 

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