In this article, we’re going to delve into the convenient world of the OTA Middlemen or as we like to call them, the ‘monopolised middleman’, or m&m’s for short, don’t be fooled they don’t taste nearly as good.
We’re going to walk you through why they don’t have the purported best Hotel Prices and how this affects the market!
Don’t believe you, prove it…
Let’s give the general m&m sector some context before discovering why they leave a bitter taste…
When you find yourself in need of a holiday you will also find yourself in need of a hotel, too rightly, you’ll want to search for the best room at the lowest price.
So, you head over to one of the m&m mecca’s (Expedia, Hotels.com, Booking.com, you know, the ones you see on the telly) to source yourself a fantastic deal. Perfect, right?….. Maybe not.
So you’ve just booked a Hotel for that trip away with your other half or family. You feel happy that you’ve deployed ‘best practice’ and got what you need at the best price the ‘market’ has to offer.
The problem is, this isn’t reality. The price you’ve just booked at could be cheaper, a lot cheaper…
These OTA middlemen get you to book through presenting a wealth of choice and get the inventory online (vice-versa) by offering the best visibility for the host/ hotelier.
Still seems legit, yes?
Yeah seems okay! Whats your point?
The hotelier could offer you a dramatically reduced price! But, they’re restricted through the commission they have to pay and contracts that hold them for their visibility and rate parity restrictions, similarly, how you found them in the first place (pssst, it’s the OTA Middlemen).
According to one source, a Vietnam-based travel tech start-up Concierge stated: “up to 50 percent of transaction value goes to middlemen like booking services and not the actual service provider…”
Not convinced! Give us some perspective…
Bob’s Boutique Hotel is in dire need of more bookings so he signs a contract with booking.com to gain exposure.
Booking.com charges Bob 25% on his room price as a base rate, let’s say Bob’s room is £100 per night. If we minus the £25 booking.com fee, as well as Bob’s overhead costs, Bob is left with almost half the takings he would’ve got from a direct booking (which have depleted since the rise of our OTA-overlords).
Bob is left with no choice but to up his room rate to £150 per night to cover the extra expense and in essence to keep up with the crowd…
So, this leaves you the customer blissfully unaware that you’re actually paying 25-50% more than you should for the same room and/or service. Although, as a trickle-down effect from the OTA Middlemen’s contracts you would never know any different.
So… This means?
Effectively the customer is paying over the odds for convenience and the service host is paying over the odds to insight this convenience.
Leaving the only ‘win, win’ firmly in the grasp of the OTA Middlemen. They sweep up the commission, sit savvy on their thrown of strict-contracts while the cost of booking hotels and other services online goes up 4% in 12 months from 2016.
Practically, if they wanted to, these companies could raise commission prices tomorrow by another 25% and still keep a vein-popping-grip on the market…
Saying this, these companies aren’t doing anything wrong, they are providing a service to which they hold the power and the power is in the price. Although, the way they present themselves through marketing and indeed sub-offers and notifications has come under scrutiny… read more on that here: booking websites under investigation over online booking practices
Gosh! Is there a better way to do this? One that equally benefits all parties involved?
Don’t worry, technology is still the answer! Stemming from the branches of the OTA Middlemen are the budding flowers of the trusted marketplace, encompassed by companies such as ourselves, Gomingo.
A socially capable, low-commission platform that’s set to shake the OTA monopoly by creating a trusted marketplace through actual and fair pricing.
Gomingo is on a mission to specifically tackle this OTA problem. We want our guests to book at the ‘true’ price and our Hosts to be content with a low commission, easy-to-use platform. We’re not interested in parity rates and contracts tying hosts down, they’re not fair and making the market more expensive for the consumer.
Hmmm, sounds good! How will it work in the long term?
By the way, we’re not uncovering a capitalist stronghold here, the OTA’s aren’t a digital Illuminati, but, they aren’t exactly a consumer utopia either (we thought this needed to be pointed out).
Let’s go back to Bob, the Boutique Hotel owner for another dollop of context…
Bob has had enough with Booking.com’s charges, he feels deflated. One of Bob’s boutique-buddies tells him about Gomingo, saying “they only charge 10%, no contracts and you’re online in 5 minutes “. Bob, intrigued agrees to give it a go! He’s online in minutes, spurred on by Gomingo’s introductory offer of 0% commission on bookings for 6 months…
Bob starts to get bookings as the platform begins to grow. After literally living-free for 6 months, Bob gets an email letting him know that his promotion has ended, but will only be charged 10% from then on, forever, guaranteed. Bob, with a new lease of life, is jumping for joy! He’s making 10% more and able to reduce his room price by 5%, attracting more customers to book with him. Furthermore, he can focus on making his hotel experience better for the customers and in turn, have submitted some lovely reviews to his Gomingo page.
A situation we want to make a reality! Where everyone is happy and have actually got the best value available. This is the market Gomingo want to mould.
Let us know your thoughts on this matter in the comments below. We love a good discussion so let’s get one going!
In the meantime, make sure to check out Gomingo’s brand spanking new company page! It’s got all the details you need to know about our company and our brilliant technology tying it all together!