7 reasons Booking.com Rate Manager is being killed off
Here it goes. All in. We are making a prediction that Booking.com Rate Manager is going to be killed off, or shut down during 2018. Here are 7 reasons the Outperform RMS team are making this educated guess as well as what we think the impact will be.
Hotels don’t want Booking.com to have more control on their data
This one saw a lot of push back. Hotels asked the question why Booking.com wanted to make hotel tech and sell it for market prices. What was in it for them in a tough industry? Maybe the data. Hoteliers are (we think) more switched on than they appear to be haven given credit it seems. Global hotels players like Marriott were saying “don’t given up your data – that’s your business”. They are right.
Using an independent provider assures the hotel they remain in control.
Booking Ninja vanished?
Booking.com rate manager is a complicated product. Hotel Ninjas the channel manager never happened once purchased. It disappeared quietly. The Rate Manager got further, but without the eco system of a channel manager and PMS it required integrations. This left it disconnected.
The big property management systems didn’t play nice
PMS companies were being scraped through logins which was slowing down their systems, causing friction between them and Booking.com. It’s hard to do revenue management properly without past, current and future data on the property, competitors and market. The lack of known PMS connections was stalling progress in the higher paying segment of the market – mid to large hotels.
Cost versus earnings
With a slow uptake globally over the 2-3 year roll out, the size of the operation cannot be justified from the return of paying customers. A team of that size, we estimate 100+ people globally, would need 10,000 paying hotels to justify it in another hotel tech company, which wasn’t the case. Loss in a division can only be accepted for so long in a company where large profits from commissions is the norm.
The hangover of price fixing
Having software that calculates pricing for hotels, for which you are the largest seller of room nights in the world, is a quick way to raise eyebrows. Remember price fixing was investigated from 2012 and changes were made. The Competition and Markets Authority has recently looked into the tactics of Booking.com and Expedia around pressure selling. Plus, the European Commission has started looking into Antitrust where companies with a dominant position or monopoly abuse it – such as Google being fined. Whilst this does not directly affect Booking.com – they must consider similarities in their position and how tools distort the marketplace they control. Is it worth the risk?
The Booking Holding move
Moving to Booking Holding from Priceline, sees the Booking.com flagship company lead the way. Paving the way to becoming the number one travel booking website on the planet for hotels, car rentals, experiences and also soon flights. Having conquered hotels, the other three will need hard work. Do they need the distraction of making hotel tech?
Steve Ballmer, Ex CEO of Microsoft says so
Steve Ballmer said it at a talk in Cambridge. Microsoft did Windows and micro-processors into back-ends. Google’s trick was and still is paid search. Booking.com one big trick is booking hotels. Huge companies usually do one thing really well, on rare occasions two. Apple, for example managed touch screen tech and the Mac. For Booking.com trying to do hotel tech where the hotel is the customer in a guest focused business isn’t a great fit. Being the best at booking another travel experience, is a closer fit, or offering something closer to the guest experience.
If we’re right and this does happen, what does this mean for the other Booking Suite software services? Do they continue as is? Is it the whole division to be eased off, or trimmed and reintegrated into the extranet? You could say any of the above for any of the products. Why didn’t they give it all away for free? Maybe Booking.com still will, but then a number of the above still apply: integrations, cost of running the service and hotels being wary about their data.
To us it seemed inevitable three years ago. It’s taking a while to play out.
Who benefits if this happens?
Hotels have benefitted already. They have had their awareness raised that helpful revenue management systems exist, saving time and increasing RevPAR. Smaller hotels and bed and breakfasts are now looking for technology to help them grow revenue and save time.
The chosen few. Just a handful of companies can do revenue management with algorithms really well. Duetto, IDeaS, RevPARGuru, LodgIQ and of course Outperform RMS. There are a couple more, but it’s still limited. Hotels looking to switch will be more likely to contact one of these companies.
The term Revenue Management Systems still confusing
Many tech companies claim to offer revenue management, but the range of what this means is large. It ranges from just giving some price information through rate shopping, to offering rules based changes to pricing, through to using a full range of data from the market, hotel and competition with algorithms to determine the optimum pricing and give insights.
At Outperform RMS, we want to see more small, medium and large independent hotels using price optimiser using big data and spending more time on strategy and ideas rather than manually calculating the best pricing. True revenue management is an art and is more than just rate shopping, or a set of rules.