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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (71764)

12/18/2022 6:05:47 PM

From: Elroy

Respond to of 78763

Booking gets wholesale discounts from the Hotels.
I think what they get is a larger share of the nightly revenue. The system is set up so that the price the customer pays is required to be uniform (or at least not below a minimum nightly price). The "discount" you mention is I think a larger post-sale commission, not any discount that gets passed on to the customer. Naturally, if the hotel gives booking a larger percent of the sale, booking makes a larger effort to sell that room.
they get more from unbranded Hotels (prevalent in Europe) than in the US. They often guarantee some volume for the Hotels too which has value.
Perhaps, but for all of this they take a larger and larger share of the sale.
You can also see through booking if they have actually free rooms or not.
This isn't complicated.
So it’s way more complicate than setting up a Craigslist type website for cheap. Booking has just brand, they they have wholesale agreements with ten thousands of Hotels, booking system payment, customer service.
None of what you've written above is complicated.
From the hotel / AirBNB owner's perspective, the booking industry would be much better run if there were a database of available rooms, and the OTA's all had access to this database and tried to sell the rooms. That would put the power in the hands of the room inventory owners. Currently there is too much power in the OTA's because they control access to the customers, and the way their contracts with the room inventory owners are structures it prevents sales price competition. Since we customers don't see different prices, we don't care which OTA books our room. Thus the OTA with the monopoly position is able to rape the room inventory owners on commissions.
Room inventory owners (hotels, AirBNB) would greatly benefit from selling their inventory first come first serve to ALL OTA's at prices set by the hotel, and then let the OTA sell it for whatever profit the OTA can manage.
Unfortunately there is no large new entrant in booking that wants to enter the space and ..... reduce commissions! So the hotels are stuck until they manage to join together somehow, and take action to lower outrageous booking commissions.