Why do they need 15%?
Reported profits support this and service provision has certainly not been enhanced in line with the increased charges! And of course new owners must recoup the high price they paid for their online agency businesses in recent years:
- In 2004 Active Hotels was sold for £90 million
- In 2005 Bookings.com (now booking.com) was sold for €110 million
- In 2006 Laterooms was sold for £120 million pounds
Major league profits
Profits for the online marketing players to date are huge! We estimate that $3,000,000,000 commission every year is taken from hotels and accommodation businesses from just two of the industry’s main online booking companies, Expedia and Priceline, alone.
With little in the way of overheads, that’s a huge wad of profit!
Expedia announced recently that it has over 24,000,000 unique users. Priceline’s booking.com states it has over 18,900,000 unique users. Each user has the potential to make more than one booking per year. And each time they book through Expedia or Booking.com they will realise those companies 15% in commission fees.
When you consider the nature of a market which includes only a few large, global businesses each operating multiple online booking brands then you really start to get a feel for the cash cow these guys are milking for all its worth!
While 15% per booking might not seem a great deal to the individual hotelier, when you multiply this across the number of hotels, guest houses, B&Bs and so forth involved in your local community, then in your country and then throughout the world… you can see that the impact on the hotel and accommodation sector and the wider economy is quite astounding.
The following is a simple calculation for a sample of just 500 hotels:
Hotels recieving bookings 500
Room nights per day per hotel 2
Total annual bookings 365,000
Average commission per booking €15
Total annual commission €5,475,000!
It all goes to show just how lucrative the online booking industry is!
Demand a Fairer Deal Today!
If you believe that the time is right for reduced fees and a better deal for the accommodation sector, join us. Demand a fairer deal today!