Why are commissionable rates in hotels the same or even cheaper?
Are you booking a weekend away through Booking, Tripadvisor or Airbnb to Barcelona or Amsterdam? Did you know that the hotel pays between 10% and 30% commission on the room rate at an Online Travel Agency such as booking.com & airbnb? The same applies if you book a meeting or conference in a hotel through a middleman. The commission percentages for the venue finders, on the other hand, is much lower than the online travel agencies. A MICE venue finder will receive around 10% commission on the total invoice. Only why are the prices through a venue finder often cheaper or the same? There are a number of reasons for this:
Not enough marketing budget
There are in total 187,000 hotels worldwide (2018) that have more than 10 rooms. However, there are enough hotels worldwide that do not have the financial capacity to make online impact. There are also many hotels that have outdated websites, which makes it difficult to rank high on Google. To be shown on the first few pages of Google these days, you are required to have a mobile responsive website.
Due to the low financial budget for a good hotel website, many hotels rely on OTAs. Nowadays, Booking.com even builds websites for hotels. There is no need to pay for this, but Booking.com requires extra commission.
At Hypermice you as a customer get full insight into the total commission per booking income and will be open and honest about its income compared to other meeting & conference agencies. We even go so far as to see exactly what we earn from an application.
Not enough marketing knowledge in-house
In addition to the marketing budget, the lack of knowledge about online marketing is also a reason for hotels to collaborate with venue finders. Some venue finders or online travel agencies are actually IT companies that book hotels and a large proportion of all staff at OTAs work in the online marketing department. In addition to this it is also hard for hotels to hire the right IT staff. The salaries within hotels also remain low, which means that it is not interesting for an online marketers to work for a hotel.
This makes it attractive for hotels to collaborate with OTAs. Also the venue finders will do sales and you can see the commission rate as a sales fee.
Industry standard is that commissionable rates are always the same
In the business travel industry, it is an unwritten rule that commissionable rates are always the same as those requested directly at the hotel. At google you can compare this well, often the hotel is not even in the top 5 cheapest room rates.
It is important to know that if you click on a room rate through Google and ultimately book at booking.com, for example, then booking.com also pays commission to a Google for the referral.
Venue finders know better what prices are doing in the market, so they can negotiate better
A major additional advantage of booking through a travel agency is that the travel agency knows what the prices in the market are doing. Because a meeting or conference request is tailor-made, an agency can clearly see what the price is doing in the market and therefore it is easier to enter into a discussion with the hotel when the neighbors offer a lower price. Read here where we at Hypermice negotiate on.
Travel agencies can book relatively more groups than single bookers
The relationship between hotels and travel agencies is generally very good. If a hotel has a good relationship with a travel agency that is responsible for large groups, chances are big that the agency will recommend the hotel to the client. This ensures that hotels like to cooperate with the agency and are therefore often willing to do something about the price. In this way there is a good chance that an agency will book groups more regularly at 1 specific hotel than an individual meeting planner.