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How to regain control over pricing and direct selling as opposed to 'Booking pays'.
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The introduction of payment systems managed by Booking.com, in particular the 'Booking Paga' program and virtual cards, has marked a significant change in hotel distribution. Xavier Pallicer, CEO of GuestPro, expressed this during his presentation at TecnoHotel OnTour Valencia, where he discussed how these methods actually affect revenue, operations and the ability of hotels to maintain a balanced distribution.
"Some may not have considered it, but this issue is critical to the hotel's revenue and to ensure balanced distribution. If a competitor can offer arbitrary discounts on our price, it will negatively affect the other players, especially direct web sales," he warned.
From faxing card data to PSD2: Booking's view on this change.
Pallicer reviewed the transformation of payment systems in hotel distribution. He recalled the beginnings of Booking.com, where they sent card information by fax, until the appearance of e-mail, which brought with it an increase in fraud. "In those days, if someone got a card number, they could process it on a terminal without any protection," he said.
To counter these weaknesses, the PCI-DSS regulation was implemented, requiring the protection and encryption of card data, as well as the recording of who has access to this information. Later, on January 1, 2021, PSD2 was implemented, requiring stricter authentication for all payments. Although its implementation has been gradual and there are still some exceptions, most recent cards no longer allow transactions without the customer's express authorization.
"What happened? Booking has identified an excellent opportunity: receive payment from the client in advance and then pay the hotel," he clarified.
Booking Paga: more comfort and less control
GuestPro's CEO explained the implications of the program. In one respect, it brings absolute convenience to the hotel:
However, the hidden cost implies complete relinquishment of control over the price.
"Booking has the ability to offer a discount to customers who use Booking Paga. This is a clever discount because it is not predictable or consistently applied; it is totally random and you don't know when or to whom it will be given. This means you can't adjust it. If you decide to offer discounts as compensation, you will reduce your margin, as there will be bookings where Booking will not apply that discount and you will," he said.
The denouement:
"In my opinion, this is the existential paradox of the hotel industry: should it enable payments through Booking or not?" he summarized.
Override payment management: more control, more revenue... and an increase in workload.
Hotels that choose to deactivate payments managed by Booking face a different approach.
"Implementing Booking payments is a strategic choice in terms of revenue, not just an operational issue. If we give ourselves away completely, then other demands will arise. Booking always finds a way to put pressure; we must find a way to maintain control."
According to Xavier Pallicer, numerous hotels are having success using paid links, especially those that have a high occupancy rate or a solid product. However, he stressed that it is essential to establish a well-defined strategy: "It is not a question of all or nothing. It can be implemented gradually, but it is necessary to make a decision. What we cannot do is act aimlessly."
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