Feature: Hotel Booking Agents
➔
is a negotiated rate that is commissionable for a room, then the hotel could be getting as little as £70 for that room. If you book with an HBA, that cost is down a lot, by more than half. So it makes sense to distribute through the HBA, as opposed to a traditional GDS channel.” In essence, the commission that the HBA is getting is small potatoes in comparison to the much bigger costs the hotel must shoulder when booking through a traditional GDS route. The hotel must pay money to get content
into the switch, from the switch to the GDS, from the GDS to, say, a TMC, from the TMC to the online booking tool and then onto the corporate. Everyone in that chain is making money from the hotel. “So you see commission is only part of the story – there are overrides, fees and marketing funds to pay for too,” added West, whose company hit the headlines in January when it announced a deal with Amadeus that would see the HBA’s entire content distributed, without extra cost to the hotels, through the GDS. He concludes, “There is no way hotels could afford to lose the amount of business they would if they stopped paying commission. It would be catastrophic.” BSI managing director Trevor Elswood feels commissions are here to stay for now but notes there’s been a sea change with the need for utter transparency. He explains, “There’s such a wealth of brands and depth of choice out there that most hotels I think would see commissions as providing a good return on investment. Yes, if you have great enough volume, you can demand a 'net net' deal where everything is stripped away and you dictate how you are going to book, thus keeping distribution costs down, but that is very rare. “Hotels will always look at where the return
but they would not see the commission that is paid by each.” Elswood adds, “Larger companies understand
the model behind transaction fees. They get it. But some smaller companies just want the free service and in those cases the agency will retain the commission.” Far from eroding, Inntel managing director Douglas O’Neill is adamant that commissions are actually thriving in some quarters, thanks to the intense competition hotels face. “Outside London the market is becoming
“There is no way hotels could afford to lose the amount of business they would if they stopped paying commission. It would be catastrophic”
very competitive between venues. If anything, they are more likely to be paying commissions now than they were before,” says O’Neill. He argues that airline commissions disappeared because transparency was lacking, something that the hotel booking agency business has dealt with. He says, “There was
a recognition that the commission that was being paid from airlines to agents was unhealthy and undisclosed. There has been a lot of talk about whether commissions are unhealthy within the hotel and venue booking sector. My view is that we are very transparent. “Airlines went through this issue and we know how
on investment is and I think there will always be elements of commission. However, it does need to be transparent. “Here at BSI we operate an open book policy. There are models out there where the customer is presented with a choice of hotels
important it is to be absolutely clear to clients what commissions are made and how much we get paid. We say, ‘this is the margin we need to make to sustain our business and anything else from the commission we will return to you’. Those that are not transparent should be fearful,” he warns. However, O’Neill does believe that once one
large hotel chain starts to shave back or eradicate commissions, then the move will quickly be followed by the rest of the industry. “Either that, or that hotel chain will be isolated. But it won’t happen in this climate because hotels need the commission-based business because they have so much. It’s all very well British Airways deciding to stop paying commissions because it didn’t have much competition on particular routes but hotels will always have plenty of competition,” O’Neill concludes. Hotelscene commercial director Ian McBride points out that commission payments overall may well be down simply because more and more corporates are looking to use the booming budget hotel chains, who pay little or no commission to agents. He says, “I think that is the number one driver behind reducing the overall commission we get. It comes from our clients' desire to use hotel chains like Premier Inn, which pays no commission. Even though often they don’t offer the lowest rates, clients think they will get the best value because of the low cost branding that these chains do. That’s where some education needs to come into play.” But what do travel buyers make of commissions which, it could be argued, may influence an agent’s decision on which property to book, possibly resulting in the purchase of nights at a hotel that’s not as good a fit as another hotel that offers less healthy commissions to the agent? McBride thinks the recession has firmly planted client focus onto rate reduction to the point where commission discussions are few and far between. “We’ve seen a trend in clients moving their focus from worrying about transaction fees and commission to worrying about reducing rates instead,” he says.
➔
WWW.THEBUSINESSTRAVELMAG.COM I 65
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88