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Strategies & Market Trends : Value Investing
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To: Elroy who wrote (71776)12/19/2022 1:03:58 PM
From: A1111   of 78744
 
If i want to book three nights in the New York Hilton what exactly is booking.com's moat compared to JoeBlowHotel.com? If JoeBlowHotel.com is 10% less for the same room, I will use it instead of booking.com.



Booking.com is a marketplace. If price is a factor consumers will apply a price filter on Booking.com's vast choice of hotels. IMO, travellers aren't stuck on one hotel then search the web for a cheaper hotel, so I don't agree on the simple model.

If travelers know that a harder to find OTA has better prices, they will make the extra effort and find the harder to find OTA.


I think you're really underestimated their SEO capabilities and consumerism. I did three searches: "hotels in berlin", "hotels near the Eiffel Tower", and "hotels near the Niagara Falls", Booking.com is on the top line. 99% of travellers search these quick phrases if not already using Booking.com.

Now for the hotel owners. How do they benefit? Posting on Booking.com is free and they only pay commission if consumers pay for their hotel. So starting off marketing is free. They still make money after commission (unless they price for a loss) for no risk. They get access to to Booking.com's SEO and large consumer traffic that JoeBlowHotel.com doesn't have. Why advertise on JoeBlowHotel.com's for lower commission if no one sees the advertisement?

Booking.com is not doing anything special, they are just hiding the commissions from the consumer, and then marketing themselves into the monopoly number one position.


This can be said about Fiverr and Ebay. It's their networking effects which gives their competitive advantage.
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