Online bookings are now nearly mainstream in the marketplace and more recently there has been a proliferation of new players. When New Zealand owned Ezibed started back in 2003 there were three existing players, Wotif, Ratestogo and Needitnow, all controlled from Australia.
The market has since become polluted with accommodation resellers, and at the same time, accommodation suppliers have been saturated for choice to assist in promoting & selling their properties. Recession hit both existing and these new players (some of which are amateurish websites with very little systems or processes but appear high on some search engines), and all have had to fight it out over the reduction of consumers.
With this proliferation of accommodation resellers and more recently channel managers such as Siteminder, Seekom, Staah & Roamfree marketing to potential accommodation suppliers, and the general exposure (advertising/marketing) of educating consumers to booking accommodation online, many would have thought that skills would have been tuned and many making the most of the ‘new age selling tool’.
But, this is still not the case, and many accommodation suppliers across the country continue to display rooms that they either have sold out within hours of, forgotten to block off heavy demand dates such as ‘cycle challenge’, ‘rugby tests’, ‘New Years Eve’s’ or local events such as concerts etc, or simply just not updated their availability and claim the first two afore mentioned.
When these overbookings occur, for the most part problems are resolved quickly and efficiently with accommodation suppliers either ‘upgrading’ or moving other customers to accommodate the booking. Basically, adhering to the terms and conditions of a mutual agreement. But on the other hand there are still many accommodation suppliers that wash their hands of the problem and instruct the accommodation reseller that they need to address the issue.
Now this wouldn’t be a problem if the first priority of the accommodation supplier was the customer. But unfortunately there are many accommodation suppliers that still exist within the New Zealand accommodation sector that create headaches for accommodation resellers by not keeping their rates and availability up to date.
Thousands of marketing dollars are spent every year by many of the top accommodation resellers in an attempt to market and advertise both their own brand and the accommodation providers that have signed with them. The whole reason for an accommodation supplier to sign with an accommodation reseller is to have their own property extensively marketed to fill gaps and increase occupancy. Inevitably, creating greater profits and providing enjoyment for the owner.
When a booking is made online, the customer is in the full belief that they have booked a room and that room will be delivered without problems, the email notification will be received in a timely manner, the booking placed into the accommodation supplier’s system, the customer checked in, stays and then departs paying any balance owed. A simple process. But when an overbooking occurs the accommodation supplier is seen as not being able to complete the agreement that the customer thought that that they were buying. More often it falls upon the accommodation reseller to handle the problem, contact the customer and then try to relocate the customer to retain the sale. The worst case is a credit back to the customer of what has been provided in a transaction therefore a lost sale to the accommodation reseller.
This lost sale is one part of the equation. Brand equity is another. As soon as the customer as been advised that their booking cannot be honoured, the customer’s attention is then turned to the accommodation reseller and the service that they provide. Recent feedback from Ezibed customers that have experienced an overbooking shows that there is a 70% chance that they may not use that online channel again to book their accommodation as they want to be guaranteed that what they have booked is available as presented to them.
And that is fair enough too.
70% is an interesting statistic. The marketing investment to attract potential customers to book with an accommodation reseller can be undone with one small error from an accommodation supplier.
Many accommodation suppliers still question the value of a 10% fee of their advertised rates. This goes towards advertising, promoting, marketing (what ever you want to call it) the accommodation supplier. Many accommodation suppliers don’t realise the costs associated with attempting to bring the accommodation supplier business, which can all be undone with one small overbooking of which some accommodation supplier’s simply wash their hands of.
How big is the problem? That is the million dollar question. From experience with Ezibed.com it happens more often that we like and results in lost revenue and associated bad pr with customers. One customer may in fact tell 5 of their friends/family of their booking experience and the result is reduced customers through the online channels and in turn reduced business to the accommodation supplier. The problem may be greater with larger accommodation resellers such as Wotif.
So how do we as an industry get through to those responsible that they do in fact have a responsibility to preserve both their own and the accommodation resellers brand integrity? I’m not sure of the answer yet, but I hope that if we talk about it more within the industry, the closer both accommodation suppliers and accommodation resellers can work to create a vibrant online accommodation booking industry with low associated costs and high yields.