The Hotel Software Darwinism: How to choose the right booking enginefor your hotel (part 2)
Hotel Booking Engine: The copy/paste Paradox
Expedia carries out over 1.000 A/B tests per year to optimize its booking process and offer a seamless online experience, but what about booking engines? When it comes to conversion, customer-centric features such as marketing and sales automation should be the priority, but is this the case with reservation systems?
To understand how booking engines position themselves on the market, we ran an empirical experiment. The methodology can be a little unorthodox, but the results are still very interesting: we downloaded content from over 100 vendors websites and uploaded on a text analyzer software. We were expecting keywords like guest or experience to be a prominent part of the communication, but the main sales pitch gravitates mainly around concepts like direct booking and conversion.
The word guests, for example, recurred only 0,8% of the times, making it hard to believe that hotel booking engines are really custom-oriented. Even worse, the communication on the majority of these websites is identical. We copy/pasted the descriptions and the main features of each software, delete the vendor names and tried to guess the booking engine name. You know what? We failed over 90% of the times. So, in this landscape of thousands of vendors with almost identical communication strategy, what should hotels look for when choosing the right tool?
In 2015, Travel Tripper’s President, Gautam Lulla, stated that, at present, booking engines are “disjointed and cumbersome systems”, unable to “compete with more advanced technologies”. Luckily things started to change and today’s more advanced reservation systems can provide advanced features to increase conversion.
Commission or Flat Fee?
Price is another essential aspect to analyze when choosing a hotel booking engine and, even in this case, hotel software share pretty much two price models: flat fees or commissions on the finalized purchases. As a general rule, properties with smaller room inventory and low ADR should opt for commission-based pricing (usually varying from 2% to 8%), while bigger hotels, chains or luxury properties can benefit from flat fee systems. We suggest using a simple formula in order to choose which way to go:
Revenue generated on the website in one year
booking engine % commission rate
If the total is lower than the yearly fee, then it’s probably safer to choose the commission model. If the total is higher than the flat fee, you may want to pay a fixed rate, even though it can seem more expensive at first sight. Of course, if the direct revenue increases, the commission model can become counterproductive, so this is a decision to take only after analyzing all variables.
Another aspect you don’t want to overlook is the third-party integrations offered by the booking engine. Smaller companies usually have problems connecting with channel managers, PMSs and metasearch, because they require a minimum volume in order to open their APIs, a volume that often is not matched by small players.
Easier access to distribution is one of the hottest topics in the Industry and some suggests that blockchain technology (the one behind cryptocurrencies like Bitcoins) could fix this problem once for all, but the technology is at its infancy stage, so make sure that you do not end up with a reservation system that cannot interact with your other tools.
As you can see, the number of variables when it comes to choosing a booking engine is ridiculously high. tooly.tips main goal is to facilitate this choice, by aggregating results, features and reviews.
Even though we are a relatively young company, we strongly believe that getting hotels and vendors together on a neutral, super partes marketplace could help create a more transparent, professional and less location-based market.
Because, at the end of the day, only the best hotel software will survive. And, here at tooly.tips we like to label ourselves as evolutionists.
written by Massimo Caria
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