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This seems to be a sour grapes article representing the grudges of online travel agencies (OTAs) against Google. This quote really caught my attention: "OTAs e

This seems to be a sour grapes article representing the grudges of online travel agencies (OTAs) against Google. This quote really caught my attention: "OTAs earn a roughly 20% commission from hotels for each reservation they book, which covers their cost of marketing, inventory acquisition, customer support and payment processing." 20% is a ton! Later in the editorial, the writers complain about how Google takes "a 10% to 15% commission on net revenues from reservations booked through its meta-search. Google thus gobbles up most of the profits that OTAs earn". But Google is taking on the marketing! To be fair, inventory acquisition and payments are also costs, but from running travel sites before, travel truly is a marketing game. As a result, their take makes sense given that they're really taking the place of the traditional marketing channel. Google's concentration of power definitely is concerning. But the OTAs (who have been living off fat profits for years; see Priceline stock [1]) get none of my sympathy. [1] https://finance.yahoo.com/quote/PCLN/; https://finance.yahoo.com/quote/PCLN/; has outperformed Google stock over the past 10 years

prostoalex 9y ago
Seems like almost every hotel chain nowadays pitches booking through their own Web site, often throwing some extra perks for direct bookings. They also try to rope the customers in with fairly generous loyalty programs, “unpublished” rates and credit card marketing tie-ins. So yeah, seems like OTAs were okay with this as long as it was IHG, Hilton, Marriott, Accor, Choice Hotels and Best Western doing this on their own (or through fairly low-traffic sites like roomkey.com or pointshound.com), but now that Google actively promotes direct bookings, they’re feeling the effect.
- aviv 9y ago
  This. I book quite a few hotel stays throughout the year and you will definitely get perks and resort credits when booking directly. Just ask for it. They don't want you hanging up the phone and going back to Kayak which may lead you to another property while deciding.
- yardie 9y ago
  I’ve tried to book directly through the hotel site. And when I’ve informed the reservation desk the rate is cheaper through an OTA they tell me to book using the OTA. That was a 20% commission they could have kept or given to me as a discount. I guess I don’t know how agreements work. Seems like OTAs are more flexible with pricing compared to the hotel staff.
  - hrktb 9y ago
    I think the difference is in mainly in booking conditions. For instance a lot of OTA will push non cancellable rooms for lower prices. The hotel probably doesn’t want to deal with these customer issues directly, while the guaranteed benefit is attractive.
  - Carb0n 9y ago
    Because the rate is not released by the hotel. Some agents undercut the rates, or floates a rate that is supposed to be marked up, naked (without mark-up) to the web. Asking the guest to book from the OTA is to see what voucher the hotel receives, and catch that agent as the culprit who undercut the rate without hotel's consent. The agreement with hotel and agent is that hotel can refuse to honour the voucher. In this case, the agent has floated a rate not discussed with the hotel. Hotel asked the guest to go ahead and book if there's a lower rate in OTA. Guest books, hotel has the right to refuse to honour the voucher.
  - sloxy 9y ago
    The OTA can buy & manage it's own stock of hotel rooms in advance for hotel X and then sell them on for $whatever, $whenever. Not every OTA is just a proxy. Some maintain their own stock and do forecasting/yield management etc..
ckastner 9y ago
> But the OTAs (who have been living off fat profits for years; see Priceline stock [1]) get none of my sympathy. Any move that hurts Booking.com's revenues is a good move, by me. I don't have an issue with them taking 20% commission, but I loathe all of the dark patterns they employ to make that commission.
- dazc 9y ago
  '... but I loathe all of the dark patterns they employ to make that commission.' I tried to leave a negative review for a hotel on booking.com and the overall result was 3.5 out 5! At least with google reviews I can get a fair picture of what the place is actually like. And, all that 'just one room left at this price' is basically fraud. It does annoy me though when I try to book direct and get charged the exact same price. I know with chains you get loyalty discounts and such but a there are still a lot of independents where you don't.
  - dx034 9y ago
    > I tried to leave a negative review for a hotel on booking.com and the overall result was 3.5 out 5! Do you mean tripadvisor? Booking.com works on a scale of 1-10.
    - dazc 9y ago
      Possibly.
  - dawnerd 9y ago
    And that pretty much explains why even the worst hotels are rated the same as the high end places. Well besides the obvious paid reviews. It’s becoming a real hassle to find places that are not rundown messes that don’t cost 200+ a night (and even then...)
BoiledCabbage 9y ago
This to me still seems like a net loss. old: OTA makes a $20 commission on a $100 rate through them new 1: Google makes an ~$20 commission on a $140 room rate (15%) through Hotel new 2: Google makes a $17 commission on the $117 room the OTA now has to sell it. Or the OTA tries to still sell at ~$100 and only makes a $3-$5 commission. And this lovely quote: > Google also requires OTAs to give its webcrawlers access to proprietary information including room availability, descriptions, pricing and custom bundles and other data—information that OTAs typically keep closely held from competitors. Great, the amazon model of "to run on our platform we get all the data of what's profitable for you, how profitable it is, and what buyer interest is, and we then use that to power our competing product which also runs on our platform to take all the profit out of the marketplace and force you out." Nope this isn't illegal, but again seems like an abuse of position. It's like running a competing restaurant, but also being the city's auditer and gathering all financials as well as the food inspector who is required to inspect (watch) every recipe and dish get made to be able add it to their own menu if it's a hit. And finally regardless of all of the above, does noone else see it as a problem the general idea of looking for a percentage of revenue of every link a user follows from google? For example next them move into newspapers, and want a percentage of subscription ad-revenue for users forwarded. "Yeah we own adwords, but it's not anti-competitive. You can always run ads on your site and just not be indexed by us. [And not get referral traffic]. If you want us to accurately spider your site and refer to pages, we take a percentage". So hotels, car rentals, flights, shopping, movie tickets, (and any other search that google productizes)... The end game of this is have any transaction that happens on the web that came from a google referral, they get a cut. It's obviously not there yet, but that's the direction they keep moving: Turn search into an app store / amazon style platform and get 20% of everything on the internet.
- bkor 9y ago
  > Great, the amazon model of Apple does pretty much the same thing with its suppliers, no? They even work out what profit and costs a supplier is supposed to have (meaning: if your costs are higher it's the fault of the supplier). A "others do it too" might not be too good of an argument, but I do wonder why heavily looking into your suppliers (costs, etc) is that bad.
- 9y ago
dragonwriter 9y ago
> This seems to be a sour grapes article representing the grudges of online travel agencies (OTAs) against Google. Superficially, but more deeply it's part of the propaganda war the WSJs corporate parent has been carrying out against Google on all fronts for quite a long time, which is in part partisan/ideological, and in part business over similar issues in publishing.
- mcny 9y ago
  I still don't get why we can't talk about banning "fake news" like wall street journal on hn. These are clearly hit pieces and as my parent mentioned, part of a coordinated effort to undermine Google. They did the same thing with YouTube. Everyone is worse off because of wsj.
  - pimmen 9y ago
    You absolutely can bring it up. Now, here's the issue though; "fake" implies that they fabricated or exaggerated stuff, not just skewed the coverage. If you can provide solid evidence that the WSJ fabricated this news piece you could probably get this link off of HN.
  - gumby 9y ago
    I don’t think it should be banned even though I agree with yo that the WSJ editorial is wrong more often than not. I feel this way because it is (inexplicably) widely read. Far better to know what a lot of people hear and believe than to live in a bubble. My criteria are all about size and reach. For example I wold consider a flat earth discussion (99% parody, 1% wtf I assume) a waste of HN attention bandwidth.
  - Spooky23 9y ago
    It’s not news, it is an editiorial. Although I consider the modern WSJ editorial board to be pretty loathsome, it isn’t fake news.
  - SmellyGeekBoy 9y ago
    Surely it's better to discuss these stories publicly and make errors / biases known than to just pretend they don't exist?
rplnt 9y ago
I was actually surprised (some) online booking agencies actually vet the locations they sell. So there is significant cost to scouting and vetting the hotels, i.e. to protect the customer. They also offer some various guarantees which have to be factored into the commission. I'm fairly certain Google skips all of this, so I would say their profit is effectively (much) higher. What sucks about the former approach is that booking portals make sort of an exclusive deal, where the price they advertise (with their cut) is as low as a direct sell.
- jpalomaki 9y ago
  What I find interesting is that I've seen cases where you don't even find a matching price from the hotels own booking system. I understand they can't go lower than booking site due to contracts, but it would make sense to offer at least similar rates in order to attract direct bookings.
  - notahacker 9y ago
    They'll pick up direct bookings from people who aren't interested in price comparisons and "special offer, only three rooms left, no refund" though. Same as few service providers choose to match their Groupon price on their own website. They'll have done some sort of estimate that the revenue they lose from charging direct bookers lower prices is greater than the revenue they lose from people comparing their price with the OTA price, even if that estimation is on the back of an envelope.
tactwork 9y ago
^

prostoalex 9y ago

Seems like almost every hotel chain nowadays pitches booking through their own Web site, often throwing some extra perks for direct bookings. They also try to rope the customers in with fairly generous loyalty programs, “unpublished” rates and credit card marketing tie-ins. So yeah, seems like OTAs were okay with this as long as it was IHG, Hilton, Marriott, Accor, Choice Hotels and Best Western doing this on their own (or through fairly low-traffic sites like roomkey.com or pointshound.com), but now that Google actively promotes direct bookings, they’re feeling the effect.

aviv 9y ago
This. I book quite a few hotel stays throughout the year and you will definitely get perks and resort credits when booking directly. Just ask for it. They don't want you hanging up the phone and going back to Kayak which may lead you to another property while deciding.
yardie 9y ago
I’ve tried to book directly through the hotel site. And when I’ve informed the reservation desk the rate is cheaper through an OTA they tell me to book using the OTA. That was a 20% commission they could have kept or given to me as a discount. I guess I don’t know how agreements work. Seems like OTAs are more flexible with pricing compared to the hotel staff.
- hrktb 9y ago
  I think the difference is in mainly in booking conditions. For instance a lot of OTA will push non cancellable rooms for lower prices. The hotel probably doesn’t want to deal with these customer issues directly, while the guaranteed benefit is attractive.
- Carb0n 9y ago
  Because the rate is not released by the hotel. Some agents undercut the rates, or floates a rate that is supposed to be marked up, naked (without mark-up) to the web. Asking the guest to book from the OTA is to see what voucher the hotel receives, and catch that agent as the culprit who undercut the rate without hotel's consent. The agreement with hotel and agent is that hotel can refuse to honour the voucher. In this case, the agent has floated a rate not discussed with the hotel. Hotel asked the guest to go ahead and book if there's a lower rate in OTA. Guest books, hotel has the right to refuse to honour the voucher.
- sloxy 9y ago
  The OTA can buy & manage it's own stock of hotel rooms in advance for hotel X and then sell them on for $whatever, $whenever. Not every OTA is just a proxy. Some maintain their own stock and do forecasting/yield management etc..

ckastner 9y ago

> But the OTAs (who have been living off fat profits for years; see Priceline stock [1]) get none of my sympathy. Any move that hurts Booking.com's revenues is a good move, by me. I don't have an issue with them taking 20% commission, but I loathe all of the dark patterns they employ to make that commission.

dazc 9y ago
'... but I loathe all of the dark patterns they employ to make that commission.' I tried to leave a negative review for a hotel on booking.com and the overall result was 3.5 out 5! At least with google reviews I can get a fair picture of what the place is actually like. And, all that 'just one room left at this price' is basically fraud. It does annoy me though when I try to book direct and get charged the exact same price. I know with chains you get loyalty discounts and such but a there are still a lot of independents where you don't.
- dx034 9y ago
  > I tried to leave a negative review for a hotel on booking.com and the overall result was 3.5 out 5! Do you mean tripadvisor? Booking.com works on a scale of 1-10.
  - dazc 9y ago
    Possibly.
- dawnerd 9y ago
  And that pretty much explains why even the worst hotels are rated the same as the high end places. Well besides the obvious paid reviews. It’s becoming a real hassle to find places that are not rundown messes that don’t cost 200+ a night (and even then...)

BoiledCabbage 9y ago

This to me still seems like a net loss. old: OTA makes a $20 commission on a $100 rate through them new 1: Google makes an ~$20 commission on a $140 room rate (15%) through Hotel new 2: Google makes a $17 commission on the $117 room the OTA now has to sell it. Or the OTA tries to still sell at ~$100 and only makes a $3-$5 commission. And this lovely quote: > Google also requires OTAs to give its webcrawlers access to proprietary information including room availability, descriptions, pricing and custom bundles and other data—information that OTAs typically keep closely held from competitors. Great, the amazon model of "to run on our platform we get all the data of what's profitable for you, how profitable it is, and what buyer interest is, and we then use that to power our competing product which also runs on our platform to take all the profit out of the marketplace and force you out." Nope this isn't illegal, but again seems like an abuse of position. It's like running a competing restaurant, but also being the city's auditer and gathering all financials as well as the food inspector who is required to inspect (watch) every recipe and dish get made to be able add it to their own menu if it's a hit. And finally regardless of all of the above, does noone else see it as a problem the general idea of looking for a percentage of revenue of every link a user follows from google? For example next them move into newspapers, and want a percentage of subscription ad-revenue for users forwarded. "Yeah we own adwords, but it's not anti-competitive. You can always run ads on your site and just not be indexed by us. [And not get referral traffic]. If you want us to accurately spider your site and refer to pages, we take a percentage". So hotels, car rentals, flights, shopping, movie tickets, (and any other search that google productizes)... The end game of this is have any transaction that happens on the web that came from a google referral, they get a cut. It's obviously not there yet, but that's the direction they keep moving: Turn search into an app store / amazon style platform and get 20% of everything on the internet.

bkor 9y ago
> Great, the amazon model of Apple does pretty much the same thing with its suppliers, no? They even work out what profit and costs a supplier is supposed to have (meaning: if your costs are higher it's the fault of the supplier). A "others do it too" might not be too good of an argument, but I do wonder why heavily looking into your suppliers (costs, etc) is that bad.
9y ago

dragonwriter 9y ago

> This seems to be a sour grapes article representing the grudges of online travel agencies (OTAs) against Google. Superficially, but more deeply it's part of the propaganda war the WSJs corporate parent has been carrying out against Google on all fronts for quite a long time, which is in part partisan/ideological, and in part business over similar issues in publishing.

mcny 9y ago
I still don't get why we can't talk about banning "fake news" like wall street journal on hn. These are clearly hit pieces and as my parent mentioned, part of a coordinated effort to undermine Google. They did the same thing with YouTube. Everyone is worse off because of wsj.
- pimmen 9y ago
  You absolutely can bring it up. Now, here's the issue though; "fake" implies that they fabricated or exaggerated stuff, not just skewed the coverage. If you can provide solid evidence that the WSJ fabricated this news piece you could probably get this link off of HN.
- gumby 9y ago
  I don’t think it should be banned even though I agree with yo that the WSJ editorial is wrong more often than not. I feel this way because it is (inexplicably) widely read. Far better to know what a lot of people hear and believe than to live in a bubble. My criteria are all about size and reach. For example I wold consider a flat earth discussion (99% parody, 1% wtf I assume) a waste of HN attention bandwidth.
- Spooky23 9y ago
  It’s not news, it is an editiorial. Although I consider the modern WSJ editorial board to be pretty loathsome, it isn’t fake news.
- SmellyGeekBoy 9y ago
  Surely it's better to discuss these stories publicly and make errors / biases known than to just pretend they don't exist?

rplnt 9y ago

I was actually surprised (some) online booking agencies actually vet the locations they sell. So there is significant cost to scouting and vetting the hotels, i.e. to protect the customer. They also offer some various guarantees which have to be factored into the commission. I'm fairly certain Google skips all of this, so I would say their profit is effectively (much) higher. What sucks about the former approach is that booking portals make sort of an exclusive deal, where the price they advertise (with their cut) is as low as a direct sell.

jpalomaki 9y ago
What I find interesting is that I've seen cases where you don't even find a matching price from the hotels own booking system. I understand they can't go lower than booking site due to contracts, but it would make sense to offer at least similar rates in order to attract direct bookings.
- notahacker 9y ago
  They'll pick up direct bookings from people who aren't interested in price comparisons and "special offer, only three rooms left, no refund" though. Same as few service providers choose to match their Groupon price on their own website. They'll have done some sort of estimate that the revenue they lose from charging direct bookers lower prices is greater than the revenue they lose from people comparing their price with the OTA price, even if that estimation is on the back of an envelope.

tactwork 9y ago