Booking has begun not featuring properties’ advance payment/prepaid rates unless Booking charges the customer.

Recently HospitalityNet and its topic champ Fabian Bartnick asked its World Panel of revenue management experts to elaborate on the implications of new policies.

Here is my take.

Hotel advanced booking/pre-paid rates are typically 10%-20% below BAR (Best Available Rate). These rates have always been an important strategy to put as much business on the books and to decrease cancellation rates plaguing the industry for years, reaching as high as 50% in some destinations.

Booking..com has been shifting its business model from agency to merchant for years. Booking began its operations 100% in the agency model (commission-based, similar to traditional travel agencies). It provided this OTA with competitive advantage over Expedia, which operated 100% in the merchant model (prepayment of all reservations at time of booking). Over the years, Booking embraced the merchant model, especially after acquiring Agoda in Asia Pacific.

In Q1 2024, more than 57.5% of Booking..com's reservation revenue came from merchant revenue, an increase of 16.2% YoY (Year-over-year); agency revenue decreased to 42.5% from 51.5% a year ago.

Now, Booking..com wants to get their hands on the lucrative hotel pre-pad rates. It is as simple as that.

Can revenue managers do anything about it? Yes, together with marketing team, start promoting AGGRESSIVELY its Advanced Booking Rates (prepaid rates) at 15%-20% discount to BAR on the property website and via digital marketing to bring price-conscious customers.

Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist

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