Customers using online travel agencies (OTAs) don't usually go beyond the first few pages of the search results when looking for a place to stay. Often, they don't even look past the first page.
That means positioning is key, and accommodation providers are all keen to find a way to get to the top of the search rankings. How does a property get a premium position in the search results? More importantly, is it fair?
Booking.com says that properties in its Preferred Property programme 'stand out thanks to their excellent service and quality/price ratio with competitive prices. Participation in the programme requires meeting a specific set of criteria and takes into account feedback from previous guests'.
With that statement in mind, I did a search on Booking.com for Birmingham in February, and the second property listed (out of 73 found) had a review score of 6.7 out of 10. Other 'preferred' properties had review scores of 6.2, 6.3, 6.4. That suggests that 'feedback from previous guests' probably isn't one of Booking.com's highest priorities.
As for the competitive prices, the Birmingham hotel was selling at the same price on Hotels.com, Agoda.com, Expedia.com ... Anybody who read our previous blog will know why that is: the leading OTAs (Booking.com included) demand that properties do not sell any cheaper on their own website. These tactics take away any option for 'competitive prices'.
So, the criteria that properties are supposed to meet (cheaper prices and good review scores) don't actually seem to be the criteria at all.
What is the requirement then? How do properties get featured at the top of the search rankings? Well, the leading OTAs have certainly not missed the opportunity to squeeze a few more pennies from their beleaguered owners. They simply ask them to pay more commission.
It's true that there are other factors involved; the property needs to perform, after all. OTAs want properties that have the highest conversion rates at the top because those are the ones they make the most money from. High commissions + high conversion rates = lots of profit.
And they are very good at making lots of profit. The Priceline Group's share price has doubled in the last four years and they made a profit of 2.55bn in 2015.
However, although this is fantastic for OTAs, the consumers and accommodation providers are losing out - again.
Consumers are losing out because the disingenuous messaging leads them to believe that properties are featured because of their quality and value. How many consumers know that the featured properties are simply paying more money?
How about using an algorithm that is based on proximity to search location, price and review score, which is something Hotel Bonanza will do? Now that would give consumers genuine choice that is relevant to their search.
For accommodation providers, the basic commissions of 15%-18% are still not enough to guarantee any visibility, and many properties are left languishing down the rankings simply because they either can't afford to, or are not prepared to pay more money.
Again, the OTAs are the only ones winning. Hotel Bonanza launches next month and will be using a much fairer algorithm that gives the consumers what they are searching for and only charges properties 8%.