Powerful marketing tools by online travel agencies’ (OTAs) have “intimidated” hotels and prevented them from lowering rates on their own websites, according to BookedHappy founder Charlotte Gossage.
Through her platform, she aims to bring business back to hotels through deals that refer customers to the hotels’ own websites to enable direct bookings.
Where did the idea of BookedHappy come from?
The journey goes that you start on Booking.com then go to hotel brands but finish booking on an OTA. Hotel websites don’t offer extras like an OTA. And we think we get the best rates on the agencies’ platforms. The reason is that OTAs have so much marketing power behind them that hotels also show guests that they rely on them. So we all feel comfortable going through the agencies. And since all hotel websites are cookie cutters, they don’t stand out to consumers. Through BookedHappy, we want to get hotels to work harder and get guests booking directly with them via their website.
Would you say OTAs are taking advantage of hotels through high commission, while some room prices are offered at lower rates on the hotels’ websites?
I think OTAs are [taking advantage, yet] slowly but surely, the savvier hotels are realising that even in OTA contracts, a hotel brand can give a lower rate. But the mentality is still that OTAs are taking advantage of their powerful position and intimidating hotels [by not allowing them] to offer lower rate when in fact, there is a grey area and hotels can give consumers lower rates.
Platforms like Booking.com and Expedia were launched to make bookings, faster and easier while offering attractive deals. Why take a step backwards to direct hotel bookings?
OTAs told hotels, ‘Oh, we’ll help you to get your rooms filled,’ and then they took control. So hotels got a bit complacent, but room rates were at a four-year low last year and hotels’ bottom line is really being affected. I wouldn’t be surprised if some hotels were giving half a million dollars to Booking.com a year. But if you look at Booking.com and see how many bookings have been made, keeping in mind that the average room rate is around [$100], even 15 percent commission is a lot of money.
What was one of your main challenges when setting up BookedHappy?
It was difficult to get hotels to put our widget on the website because they don’t want to try something new and be the first. My barrier to entry is hotels as they’re not too keen on changing. I was speaking to a hotel in Al Barsha and its general manager is working really hard on direct bookings because he reduced commissions and his owner is very happy. Owners are starting to see what you can do when you reduce commission, but it’s a tough one because now they’ll think, ‘Oh we have to spend on websites.’ But we went through a new technology partner and built a website to make it easier to on-board hotels and are now trying to get them to our website.
What is your current business model?
I want to put myself in the consumer’s shoes as much as possible. We’re still deciding on the revenue model for merchants, because they want worldwide exposure before people land in Dubai. When we get a pool of 50 hotels, if we see a high conversion to direct bookings, then we’ll move forward with a new model. If I have to go down the commission route, I will. Commission won’t be more than five percent, though, but that’s turning into an OTA, and I can’t turn into an OTA. Bookedhappy never wants to be another OTA. If it does turn into an OTA then I have failed in my mission.
What is your biggest challenge currently?
Hotels’ main concern is whether or not we will drive traffic to their website. That’s the only question we get. The answer is ‘yes,’ but we’re a start-up. Give us some time. Everyone wants something yesterday. The pressure is on and I appreciate it, but short term here, how can we fix this yesterday? The irony is that hotels in Dubai have been the barrier to entry. It’s not about fighting OTAs. It’s not a battle, but it’s a piece of the pie. Marketing people in hotels don’t realise the high commissions that go to OTAs. If everybody knew the situation, they would be more driven to boost direct bookings.
Do you think OTAs have ruined hotels’ loyalty programmes?
I do think so. Hotels are a little bit to blame themselves because they jump on bandwagons and so many loyalty programmes. My brother is a loyalty hotel member. He always was, but now, he’s more open to other hotels, which is a perfect example for me that times are changing because he will go were the deal is. And he’s got kids, so they’re going to get him [through family deals].
How is BookedHappy funded and are you currently looking for investors?
I started Bookedhappy in 2016 when I was working in a hotel. I had started it with a friend at the time. I just went through the co-founder dilemma, went back to the UK to validate the model and look for investment there. Dubai has always been the number one launchpad, but unfortunately, I realised that investors are very impatient, and if they don’t know the industry, it’s very challenging. My second investor pulled out, and because of tech developments right now, we are looking for funding. But I’m very much hoping that 2019 sees Dubai open up to pre-seed funding and small amounts of money. Other cities are doing it. I find it challenging to get in front of investors. Hospitality doesn’t get much support from the investment world. It’s ironic because tourism is the future for Dubai. While most people would invest in fintech, they wouldn’t invest in the trillion dollar hospitality industry. I hope it attracts more investors from outside, because the pool of investors here is quite small for the industry.
Why are direct bookings better for customers when compared to bookings through OTAs?
If customers book directly through hotel websites, they’re most likely to get extra perks. There’s a possible chance they might get a nicer room, according to our case studies. Sometimes kids will even get extras. Customers have more chances of getting upgrades and late checkout, and when they want to stay again, hotels remember them. Loyalty has gone out the window because we have a lot of choice, but if you book directly with hotels, they remember you, whereas if you book through an OTA, you’re just another guest and you might not get a good room. Direct bookings mean direct relationships.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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