What are the Criteria of Good Instant Booking Engine for Independent Hotels

So now you have heard of the importance of getting direct booking on your own official site but you have no idea where to start. The below summarise the criteria that I think would be important to consider before you make any decision. Feel free to suggest in the comment area if you have other consideration points, would love to hear from you.

Pricing Model

There’s no one price tag for IBE that suits everyone. Cause the one price tag could fit your budget while blowing someone else pocket. Hence there’s no one winning price point when it comes to the price of the Instant Booking Engine (IBE).

Having said that, we should focus on choosing the product with a price tag that best fit your budget and more importantly making sure it’s a good investment for your hotel business. Focus on the Return On Investment (ROI). Example: Subscribe to an IBE that cost MYR 50 per month make sense if your hotel makes more than MYR 50 profit difference in the commission you saved over Online Travel Agencies (OTAs) like Agoda and Booking.com. Make sure that the cost per months averagely hit the KPI even at your lowest season, or at least 80% of your season average.

I remember once that I have tabulated the table below with a Hotelier over a discussion on how much bookings commission he saved after installing direct bookings on their official website.

Here’s how it goes:

• Average Room Rates per night = RM 300 per night
• Total number of room at Hotel XYZ = 35 units
• Total Achievable Booking Values per month = RM 300 * 35 units * 30 days = RM 315,000
• Averagely, Hotel XYZ is getting 60% occupancy
• So, Average Booking Values per month = RM 315,000 * 60% = RM 189,000

Before IBE, rely on OTAs solely for online bookings. Below is the breakdown he tabulated

• Agoda (50%): RM 189,000 * 50% = RM 94,500
• Booking.com (25%): RM 189,000 * 25% = RM RM 47,250
• Other OTAs (5%): RM 189,000 * 5% = RM 9,450
• Offline e.g. Walkin etc (20%): RM 189,000 * 20% = RM 37,800

Commission paid to OTAs

• Agoda (17%): RM 94,500 * 17% = RM 16,065
• Booking.com (10%): RM RM 47,250 * 10% = RM 4,725
• Other OTAs (13%): RM 9,450 * 13% = RM 1,228
• Offline e.g. Walkin etc (0% or minimal): RM 0 (or at minimal)

So, we found that Hotel XYZ paying RM 22,018 per month averagely to OTAs.

After IBE, here’s his new breakdown.

• Agoda (45%): RM 189,000 * 45% = RM 85,050
• Booking.com (21%): RM 189,000 * 21% = RM RM 39,690
• Hotel Direct Booking (10%): RM 189,000 * 10% = RM 18,900
• Other OTAs (5%): RM 189,000 * 5% = RM 9,450
• Offline e.g. Walkin etc (19%): RM 189,000 * 20% = RM 35,910

After IBE, commission paid to OTAs goes down

• Agoda (17%): RM 85,050 * 17% = RM 14,458
• Booking.com (10%): RM RM 39,690 * 10% = RM 3,969
• Other OTAs (13%): RM 9,450 * 13% = RM 1,228

After IBE, he (Hotel XYZ) pay RM 19,655 per month averagely to OTAs. So, he made extra RM 2,363 averagely per month! He could now spend RM 1,000 over on online marketing of his own hotel brand and he could afford IBE of RM 500 per month and still bag RM 863 extra profit per month! I remember that he help me to understand his calculations (with a satisfy and happy smile he put on his face 🙂 ) with obvious sense of achievement for saving RM 2,363 without much changes in his operation and also very minimal investment upfront (He spent only RM 100 plus per month for the IBE).

Subscription basis might work for my friend (Hotel XYZ) but it might not for you. Below are some of the pricing models available in the market. Choose wisely.

• One off basis – My advice is to avoid one-off basis IBE as it normally won’t last more than 2 years. Many have chosen one-off basis IBE thinking that they would pay less (in long run) as they don’t have to pay monthly for the IBE for the next few years but normally they ended up getting a sub-par products (either not working with the latest browser or mobile devices e.g iPad, after a year in business) or it is not well maintain or optimize. Unless you have an in-house IT team or you know exactly what you are doing; try to avoid one-off. On top of that, normally one-off system are more costly up-front; choose wisely to avoid spending upfront ten of thousands just to find out that it does not fit your need.

• Monthly basis – Go for monthly basis if you could. Looks for a reliable vendor providing all the features you required. Take note of the scalability; e.g. additional module to pay in the future in case you need or you could afford. Normally, SAAS model / Monthly model vendor would not help in increasing your bookings as they operate purely as a solution providers; you will need to operate and optimise the revenue using the provided system. Make sure your Revenue Manager knows how to operate and optimise the output of the IBE. The last thing you want is paying for IBE thinking it would help you to increase your direct booking but your Revenue Manager allocate all your inventory to OTAs (trust me, I have seen such situation so often till I could not believe) or your Revenue Manager set a price more expensive in your IBE compare to OTA (again, trust me, you don’t want to take all the hassle for setting up an official website, pay for the IBE and then putting up price turn of your loyal fans who wanted to book direct with you).

• Commission basis – If you are not sure of paying a fixed monthly amount or you worry of your low season etc. Look for commission basis vendor. Make sure the commission is lower than your OTAs (you don’t want to go for IBE and ended up working with another OTA like vendor). Commission basis normally help improve your direct bookings with tools and services as they operate more like your partner in increasing bookings. If you could, find someone who have a good mix of “Monthly basis & Commission basis”, just make sure you simulate the return like my friend did so you ended up paying more that you used to for OTAs.

Reliability and Scalability

Make sure you choose a vendor that is reliable, the last thing you want is you direct booking engine go offline for days during the peak season. Go for a vendor which use Cloud technology and have good track record.

Make sure the IBE works well with your current operation workflows and it’s scalable in the future in case you decided to sync the booking straight right to your Hotel PMS (Property Management System). Study all the available modules even you have no plan to buy them in the near future, make sure you choose one that will cover Customer Loyalty, Account Integration and even Channel Management.

Easy of Use and User Friendly

Choose a product that is very easy to learn or have good documentation so you can train up your front desk easily. Look for a video tutorial, FAQ guide and also online support. Try their product to make sure it’s as good as it advertise.

On top of that, make sure the product can be easily installed on your Hotel Website and it’s compatible. I have seen some that takes months to install. A good one should be able to get your direct booking live within a week!

Get Local

If possible get local player as local player will normally adapt to new business compliant and local legal requirements first. For example, GST compliant (for Malaysia). Look for vendor that operate active at your region (or at least have customers in this region) so they will make sure their product stay compliant with your country’s business requirement. It’s also easier to communicate with a local vendor who knows the environment well.

Other Tips

Always ask for Trial Account before you decide to purchase and also avoid those vendor that does not advertise their price on their website. Try to ask for promo code, it works all the time 🙂

I’m sure there are a lot more to be considered before you choose your Instant Booking Engine (IBE), please feel free to comment below so we can learn from your tricks.

**Above Article is Written by Softinn Solution**

Softinn Solutions Sdn. Bhd. is an emerging travel technology company that develops a cloud-based hotel reservation system for small and medium-sized hotels. Learn how we help hundreds of hotels better manage their business and increase sales.