If You Want Real Change... Look Elsewhere

Team Hoo
17th March 2020

It's pretty much impossible to predict the future with any real certainty. At least, that's what I thought - only, as it turns out, it isn’t.

An unlikely place to make this discovery is a conference for hotel revenue managers – on paper, possibly the driest place you could find in a wet and windy February. 

Nevertheless, as a newbie to the hotel sector, I’d signed up to go gather some disciples for “this new way of doing things that is basically going to save your industry…” – a pretty big claim, especially when nobody else attending knew who the heck we were or what we were doing. Yep, the opening pitch was going to need some work…     

But as I took my place at the back of the main hall (standing room only for those who were 'fashionably late') the keynote speaker was about to step up – a guy called Magnus, job title “Futurologist”… say what now? My ‘inner-cynic’ was rubbing his hands with glee and yet he was going to be left sorely disappointed.

Magnus, as it turns out, is pretty inspirational. He’s sharp, funny, charming – basically the person you’d be happy to invite out to dinner every week, just so you could hear more. He tells this room of revenue managers (me among them) that if we don’t want to become extinct by AI tech doing all our ‘revenue managing’ for us, then we should expect change, in fact we should go looking for it, we should embrace it. Furthermore, he gives us a 5-point plan – it’s easy to follow, so just do that and the future will look after itself. Point No.1 on that plan was simplest of all – ‘Look Elsewhere’. Don’t follow the received wisdom in your sector if you don’t want to become extinct. Look to other sectors for new ideas – look elsewhere.

If I could have rushed on stage at that point and locked Magnus in an uncomfortably long embrace, I would have - he was doing my pitch for me. I was surely going to be pushing at an open door, the hotel sector has got itself in a fix and it just needs to look elsewhere…

Why? 

Because the received wisdom is this…

  • 95% of hotel room bookings start with an online search.
  • Searching for hotel rooms is controlled by online travel agents (“OTAs”) but there’s really only two you need to concern yourselves with - booking.com & Expedia.
  • These two (let’s call them ‘Booki-pedia’) pretty much own all the other major OTA & metasearch brands you care to mention.
  • Their only real way to reach consumers is to compete against each other on pay-per-click advertising, pumping over £2bn a quarter (their numbers) into Google Ads.
  • They cover the cost by passing it on to the hotels, charging anywhere from 15-40% (top end if you want to be bumped to the top of the listings) on every booking.
  • And if that’s not enough – they make hotels sign-up to ‘rate parity’ agreements, meaning the hotels cannot advertise a lower rate elsewhere, even on their own site.

So ‘Booki-pedia’ control the primary marketing channel and the price, and they own most of the competition. Not surprising then, that when travellers search online, they think they are always getting the best rate. 

But this is all to keep hush-hush one big secret…

Hotels will give you a better rate if you go and book directly with them.

It’s obvious now you know it, right? The hotels are already paying huge commissions if you use ‘Booki-pedia’, so they’ll give their guests some of that back if you go direct. And you don't even have to take my word for it.

There are still obvious issues for the traveller (“I want lots of choice and I don’t like to haggle”), and for the hotels (“how will travellers ever find me in the first place?”), but even then, Magnus has given us the answer - ‘Look Elsewhere’.

So, how did this message go down with the Revenue Managers?

Well, Rome wasn't built in a day (certainly not that day, anyway) – some speakers were keen to float the idea that paying 15-40% commission to ‘Booki-pedia’ was actually great value and, when you can see no alternative, then maybe ‘acceptance’ is a good idea. 

However, Magnus signed off with two final thoughts. The first was…

"If you want to create something new, you have to be willing to be misunderstood for a very long time.” 

But, when I spoke to revenue managers individually about what we were going to do, they immediately got it and many are already on board, so hopefully this one won’t hold true. 

The second was, any significant change has a tipping point…

“Change only has 2 gears - nothing & everything”.  

So, we’re coming and we’re pretty sure it will eventually be everything. If you want to hear more, then drop us a note, it’s hello@bookhoo.com.

(and Magnus, wherever you are, I’m a believer)   

Adrian M is co-founder of hoo.


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