Letter to Guests: The Hotel Booking Revolution and How It Affects Bed & Breakfasts – by Northeast innkeeper

This letter printed below was written by a Northeast innkeeper to explain to Bed & Breakfast  guests just how Online Travel Agencies affect small inns (as well as hotels). He requested anonymity to prevent reprisals.


“Dear Guest:

“You know the names. Booking.com, Hotels.com, Expedia, Priceline. Collectively termed Online Travel Agents, or OTA’s, they control an ever-increasing share of all hotel, inn and bed and breakfast bookings – currently almost 40% share in the United States. Hotels pay commissions of between 12% and as high as 30% in Europe. And just two players, Expedia and Priceline companies now control a staggering 95 percent of the OTA market! And now AirBnB is moving into the traditional hotel arena.


Of course, OTAs make it easy to search a destination on a single site, so I am sure that many of you make reservations using these online services. So why is all of this important to you as a traveler – or as our guests?  Caveat Emptor (‘buyer beware!’).


For starters, OTA’s don’t greet you at the door, they don’t cook your breakfast or clean your room and they don’t make your dinner reservations – but of more practical importance to you, they are not able to guarantee the best rooms or add those little complimentary extras.


OTA’s also seek to control your contact information, creating a barrier to the personal communication that is the hallmark of the guest experience at many independent hotels and inns.


Watch For Misleading “No Rooms Available”

Of course, a hotel does not have to list all of their rooms with the OTA in question but there is a significant downside. The OTA may then report that there are “no rooms available for your chosen dates” –  even when there may in fact be availability! Pay attention to the small print “no rooms available on our site”.  The “no availability” message is then quickly followed by: “but here are some lovely alternatives” –  alternatives that will of course generate commission for the OTA.


Some Countries in Europe Says Rate Parity Agreements Are Illegal

Although now deemed illegal in many parts of Europe, OTA contracts here in the US are still able to demand rate parity agreements. This means that, when listing with an OTA, a hotel is not permitted to offer you a lower rate as an incentive to book directly with them. In fact, in the US, the ubiquitous “Lowest or Best Rate Guarantees” would more accurately be termed “Equal Rate Guarantees”. Incentives other than rate are however permitted.


[That Rate Parity Agreements have sustained legal challenges here in the USA is somewhat mystifying. In this country any form of price fixing is strictly illegal. The Federal Trade Commission’s own website defines price fixing as: “…  an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms”].


But We Are Able to Offer Non-Rate Incentives

Given these realities it is not surprising that many hotels – especially the larger chains – are fighting back with well-publicized “Book Direct” campaigns offering a variety of non-rate incentives that may include, room upgrades, complimentary breakfast, loyalty programs, and more.


Most Guests Don’t Understand Organic Search VS Paid Search

And there are other OTA challenges facing hotel and inn owners. With commanding market shares – and vast revenues – the OTA’s dominate online paid search, occupying most of the top results. Ensuring online visibility is today a significant, and expensive, challenge for small independent properties – especially the many small properties who may be considering the risks of “going it alone” and not listing with any OTA. Many potential guests do not appreciate the difference between the “organic” and “paid” search (ads!) results. For reasons that are more than obvious, Google and others have no incentive to explain the differences – quite the opposite!


OTA’s Dominate Paid Search Results

It is however not just a challenge for the properties. Even more important for you as a potential guest, it also makes it increasingly harder to find the hidden gems in the market place – to find those properties who value their independence and have something unique to offer. And that search is now about to get even more difficult.


18% On Every Booking

For more than a decade, the vast majority of bed and breakfast inns have paid a fixed fee to be listed on Bedandbreakfast.com, hitherto the largest and most important website directory of B&B’s. But no more.  In 2016, together with VRBO and HomeAway, bedandbreakfast.com was acquired by Expedia for $3.9 billion dollars. Yes, billion. The not surprising outcome? You guessed it – yet another OTA is about to be born. And right now, hundreds, even thousands, of small independent properties are faced with the choice of delisting – or staying on the site and paying up to 18% commission on every booking made. The reality is that without raising their prices, most cannot absorb the high commission costs and still continue to offer the same level of flexibility, incentives and service for their guests


Every Traveler Can Help By Booking Direct

If you have read this far, you may agree that booking direct is something you will want to consider when making your next hotel booking – wherever in the world that may be.  We are collectively involved in a silent revolution.

Happy travels.