Commission based listing vs Paid listing in the Accommodation Industry

So, you’re an owner or manager of an accommodation establishment of some repute. Your hotel, b&b, guest house or self-catering property needs online exposure. You understand this need because you are in tune with the increasing trend for guests to book accommodation through the internet. What do you do?

You may decide to splash out and get a top web-designer to make you a fantastic website. And maybe its the best website in the industry – simple to navigate, easy to make a booking, all with high-quality photographs. You reckon that in no time at all, Google will send customers your way to fill your beds and increase your revenue.

But it doesn’t work out that way… Your website may offer a fantastic user experience, but most of the people who find it are probably directed there from your email signature, or your business card. It seems that your great designer failed to tell you that the accommodation industry may currently be the single most competitive online industry in the world. How can your one, lone establishment compete with the marketing budget and internet expertise of accommodation web-site’s that list hundreds or even thousands of places to stay?

The truth is that it cannot compete, but the truth is also that it shouldn’t want to compete – and I’ll tell you why…

You should concentrate on your core competencies. Your skills in the hospitality industry have probably been honed over years, and you have become an expert in your field. The experience that you offer is competitive and well placed in your market space. The truth is that marketing your establishment on the internet is simply not what you were trained to do – so why not hire the appropriate specialists to manage this for you?

There are many accommodation listing websites out there, and many are experts in their fields. They have committed teams of web-designers, programmers and server managers teamed together with booking agents, internet sales specialists and online marketing teams. But they come in two vastly different flavors: Commission based accommodation listings and Paid accommodation listings.

At this point it may be worth mentioning that I am not exactly unbiased when it comes to choosing between these two listing options. I am a member of a fresh-faced South African accommodation listing company hosted at “TravelGround.com”. We offer local establishment owners a marketing opportunity in exchange for a commission charged on all the reservations that we generate, and there are very specific reasons why, if I was in your shoes, I would always opt for the commission based option.

Commission based sites work hard to bring guests onto our sites. We only make money when we’re making money for you, and we can only make you money by bringing you bookings. Pay per listing sites, however, don’t need to work for customers at all. They have to sell to you, the hotel, b&b, guest house or self catering establishment, and then their job is done. You pay them upfront, often as an annual or once-off fee, and that leaves them totally unmotivated to bring you reservations.

You may think to yourself, “Sure, but at least pay per listing sites are cheaper.” In response to that, I say that you are sorely mistaken. Who in their right mind would offer to bring you business for X amount of money if they knew for a fact that they could make twice that if they charged you commission? No-one. If you are listing with a ‘cheap’ website, then they will not bring you business. They are cheap because they cannot attract customers – its as simple as that.

Do a simple search on Google for terms related to your area of the accommodation industry. Who buys all the advertising space? I can guarantee you that all the spots will be taken by websites such as ours – websites which survive on a commission basis. Advertising is expensive, and we can only afford to advertise because we represent a collection of hundreds of accommodations. We spend money to attract customers, because we need those customers to be guests at your establishments in order to make money. That is the kind of motivation that cannot be purchased with upfront payment – that is the kind of motivation that can only be obtained by dangling a carrot for every guest we bring your way.

When comparing the pricing of prepaid listing sites to commission based websites, it may also be worth considering who takes on the risk and who incurs the costs. When dealing with prepaid sites, the customer pays you directly, and the onus in on you to verify payment and cover all the payment processing costs. Commission based sites, however, contract with online payment specialists who can reduce the number of fraudulent payments suffered, and we absorb the banking and clearance costs. If fact, once processing costs and advertising costs are taken into consideration, our commissions are actually quite modest, and we still have to cover technological costs, staffing costs and all the other costs that any business incurs.

At the end of the day, I find it hard to understand how some establishments choose to avoid commission based online marketing when it is by far the most cost effective and measurable way to increase your enquiries and reservations.

At the end of the day, you should do what you do best – thrill your guests. And let us do what we do best – bring you online business.