The discounts that online travel agents (OTAs) offer, even in peak season, are pretty impressive.
A quick trawl through the search results for London on Booking.com displays numerous properties showing January prices much, much cheaper than their standard rates. There's 64% off, 61% off, 60% off, 59% off ... the list goes on.
That's probably just because it's January though, right? Surely it's just low-season prices because properties have got masses of empty rooms to fill?
Well, a search in May suggests that's not quite true. There's 72% off, 68% off, 66% off ... A search in August offers similar percentage discounts. While not every property has a discount as high as that, the majority of them are offering some amount of money off - often between 20%-40%.
So, why are properties being so generous? Why are they giving Booking.com such damn good deals for their customers?
When you look a bit closer, all is not quite what it seems. The property offering a discount has not actually given any discount at all, it has all come about from some clever work by Booking.com.
How can that be? It says it's a discount, so it must be a discount.
The figure that Booking.com is actually discounting is the third highest price that the property has been on sale for in a 30-day window around the check-in date (for rooms with the same booking conditions). Confusing, isn't it!
This means that if you're looking for a property on a Sunday or Monday evening, which are often cheaper days to book accommodation, you could be seeing a 'discount' based on the property's Friday or Saturday night price. Or if you are looking a week or two before or after a busy (and expensive) period for the property, the money off you're being offered could be based on those prices, which are nowhere near the average price for the property.
These tactics are simply misleading, and unfair for both consumers and properties.
They're unfair for consumers because they're being shown impressive discounts that don't really exist. As we discussed in the previous blog, rate parity clauses that the OTAs insist on render price comparison sites almost useless because the price is usually the same on every channel. This means that the 72% off price that the consumer sees on Booking.com is usually the same as the discounted price the consumer sees on Hotels.com, Expedia.com, Orbitz.com ... as well as the property's own website.
They're unfair for accommodation providers because it is hard enough for them to get direct business as it is. Having to deal with this underhand approach, which is a blatant and frankly cynical way of getting consumers to book, is particularly galling, especially when they can't sell cheaper on their own websites and are forced to pay exorbitant amounts of commission for the privilege of selling with the OTAs.
At Hotel Bonanza, we believe it's time for change.