Ask HN: How to Disrupt Booking.com / Expedia?

3 points by valueprop 6 years ago | 6 comments

Hi HN,

We are 2 engineers working full-time on a hotel booking solution with no commission, instead of 18% practiced by sites such as Booking.com / Expedia. Hotels hate this commission, but they keep paying since Booking / Expedia bring customers.

Tourists know about these brands and go there to book hotels, even though there are hundreds of other booking & meta-search solutions. Note that they won't find better prices, since hotels aren't allowed by Booking/Expedia to post better prices online. So a site with a smaller commission can't post cheaper prices. Booking/Expedia also 'price match', just in case a tourist manages to find a better price. There's an exception with https://bidroom.com/ , which shows better prices after registration, so not 'publicly'.

Tourists also prefer Booking / Expedia since their booking is guaranteed and payment is safe with these known brands.

Would you have any out-of-the-box ideas on how one could disrupt these booking sites? Obviously, if there would be any straightforward steps, you'd do it yourself. However, if you don't have the time to work on it, but have interesting suggestions, would you please share for others to consider?

Thanks!

teyo 6 years ago |

Heya :) I work in this exact area it's tough but not impossible (based on over 20 years industry experience). You are right that hotels hate the commission, actually even more they hate the way they are treated by the big agencies and they are held basically hostage by the massive advertising spends of the big players.

It's an uphill battle, and a slow one, but chances are now things might actually take a turn for the better because the OTAs have suffered under the crisis too. There's a lot of similar projects out there as yours, but it's also a huge market. It takes a lot of work on the consulting side, because hotels are an industry that's ages behind other digitally-capable businesses. So you should look more to changing their mind than looking at the guest side, trust me on this.

I'd be happy to talk and share what I know, we need every hand we can get to turn the situation around. I also work directly with Google Hotel Ads and can share some insights there. Ping me on the email that's in my profile, there's a lot to explain and it would take a book haha.

billme 6 years ago |

Might be helpful to state:

- what your current business model is;

- business models you attempted, but abandoned;

- reasoning of why the current model is broken besides an existing company having a monopoly;

- what you’re break even profit needs are

- what jurisdiction you’re in and plan to target;

- prior experience in the hospitality industry.

——

Lastly, (1) do you have any proof of “hotels hate this commission” other than your assumption that no one likes spending more money on a transaction than needed? Ask because unless you have researched this, the reasoning for why hotels use booking services might be that it’s cheaper than marketing their inventory themselves. (2) My understanding is the largest player in this space is now Google, how do you intent to deal with Google?

valueprop 6 years ago | |

Thanks! We are exploring business models. If there's traction with low operating&marketing costs, we can afford not to charge a commission, but instead charge later for optional premium services/functionality. bidroom.com charges tourists instead.

Prior experience in the hospitality industry: none. Just started a few months ago.

(1) That's a good point. Didn't consider the marketing costs for the hotel direct bookings.

(2) Do you refer to https://www.google.com/travel/ and https://ads.google.com/hotels/ ?

We looked at these. Since hotels aren't allowed to post best prices for direct bookings, a tourist will see in the booking list:

Expedia $100; Booking $100; Direct (or hotel name) $100

Without a better price, they'll choose one of the known brands.

Any suggestions on how to tackle Google Hotel Ads?

billme 6 years ago | | |

Honestly, unless you’re able to find a way to exploit the downturn related to the global pandemic, in a way that you’re able to maintain growth post pandemic, my advice would be to pick a new industry, since this is one of the industries that is in my opinion well know for killing countless startups.

If I had to give a singular piece of advice, I would suggest contacting large enterprises that still book hotel rooms, find the person who has the most control over bookings, and ask them, as it relates to the pandemic, if there’s service they feel is missing. B2B business has a much longer time to revenue, but the revenue is much more predictable. This would also solve the issue of Google, since they’re focusing to my knowledge on consumer market.

Lastly, this is a very regulated industries, I would suggest getting off the record advice from attorneys on potential legal issues based on any model you do find a product market fit for.

phillipseamore 6 years ago |

I've seen this a million times. No one accounts for the marketing spend, and they all fail.