In today’s holiday rental market it is virtually impossible to do business without this type of online travel agency (OTA). As a final consumer they help you book your hotel, flat or villa in a matter of seconds. And without a doubt they make things happen and they normally look after their customers in the right way making your booking a safe transaction. Simultaneously, they do business with the proprietor. So they are clearly double agents catering for owners and tenants alike, charging commission fees to one party or the other or sometimes both.
There are many OTA companies in the market from where to chose services from. The question is which one to use. This depends on whether you are a proprietor, retail client, or tenant. Because whether you believe it or not, OTA companies are pro-tenant or pro-owner be it a single property or a hotel chain. This month we shall analyse two major OTA companies, one of which is pro-tenant and the other pro-owner, namely Booking.com and Airbnb.
Both companies are USA-established and hugely successful, but totally different in their objectives, policies and final goals. Airbnb is very user friendly, easy to book with, works extremely well with both tenant and landlord and follows a flexible booking pattern with which clients in general are quite satisfied. It charges a low commission rate to the landlord and a larger commission to the tenant. In that sense it is perhaps slightly more pro-landlord.
They protect the payments made from the tenants and keep the funds until the 24 hours after arrival have elapsed to make sure the tenant is safely lodged in the correct property. We need not say how important it is to be careful where you rent from when going abroad. Fake bookings, non existent properties or overbooked flats have been sadly some of the difficulties and problems faced by travellers. Airbnb tries very hard to avoid this and it normally works, with some very rare exceptions.
Fake bookings, non existent properties or overbooked flats have been problems faced by travellers.
The clarity used with their booking website or application together with a most fair comments rating system makes it popular with clients. Airbnb will let the tenant leave a comment and rate the property as well as writing a comment about their stay and how good or not so good the property was. Simultaneously, the landlord can do the same. He can rate the tidiness of his tenant, compliance with house rules and even leave a comment. One report cannot normally be seen without the other which makes both sides act in a fair way.
In other words, you can have both sides of the story, whereas with Booking.com this is not possible. If you get a rough tenant or what we call a trier, someone who is always complaining no matter what you do in order to get a discount or a free ride, Airbnb offers very limited scope for this kind of abuse whereas Booking.com does not seem to do anything in this respect.
Airbnb handles your payment and you need not worry about collecting rent or paying them. Their fees are automatically deducted from your rent with a going rate of 3% or less. They just transfer the funds 24 hours after arrival of the client. It is simple and very fast. They also have a special fund to cover any important breakages caused by a tenant that may occur during a let. This is non existent with Booking.com.
Another reason landlords like using Airbnb is because you have the option to accept or deny a booking. Something that cannot be done with Booking.com, which is much more pro-tenant. It is also a generous company relocating its clientele, and tenants know this. Their generosity is fully paid for by the landlord. It is so easy to be generous with someone else’s money. I heard of several cases where Booking.com made an overbooking mistake and they relocated clients to a luxury five-star hotel at the entire expense of the landlord who was not the party that made the overbooking.
Greed is the most common business mistake known to mankind.
Then there is the communication factor. It is such a massive organisation you normally take a very long time to get through and sadly their staff do not know much of what goes on. Only recently a client told me he had a non show for a week’s let. Booking.com did little or nothing to sort the issue and he never received any money.
All this said, Booking.com seem to bring in a lot of clients and this does not apply to other OTA companies. They seem to be the strongest accommodation search and booking tool of today. They charge high fees of 15% and more and yet people use it. It is of little relevance how much they charge because customers continue to purchase via them.
Another rule they use for placement in their pages is your commission amount. This means that if you increase your commission rate from a high already 15% to say 25% or more -cases have occurred with hoteliers and landlords paying 40% and more – you are guaranteed to appear on the first page for people to see and book you first – at a very high cost. The market is free but paying such a high rate of commission results in the landlord making next to nothing.
I have never quite understood why a clever entrepreneur doesn’t copy the idea and develop a new OTA offering a fair commission rate. Up to a maximum of 10%. But greed is the most common business mistake known to mankind. Perhaps I have opened the eyes of a young entrepreneur for a new start-up?