What REALLY happens when you book your hotel through a third party
Written By: Jesse Linevsky
In my strategy and innovation role at The Guestbook, I've learned quite a few things about hotel reservations. Here I want to go over how best to approach booking your upcoming trip, whether it’s for business or your well-deserved PTO. So let’s unpack the disadvantages of third-party bookings, and I’ll tell you why I always book direct, and why you should too.
Understanding the Pitfalls of Third-Party Booking Platforms
Price Parity: More Complex Than It Seems:
While price parity agreements stipulate that hotels must maintain consistent rates across all their platforms, this doesn’t account for special incentives offered by the hotel directly. According to a report by the University of Nevada, Las Vegas, about 46% of hotels in the United States fulfilled the best rate guarantee across various distribution channels, with direct rates often being cheaper when loyalty discounts and other promotions were factored into the equation (Selvaraj, UNLV ). OTAs (“online travel agents” – think Expedia and Booking.com) often use "lead-in" rates, which appear initially low but become as expensive or even more costly than direct hotel rates once fees are added at checkout. This variance can mislead consumers who rely solely on purchasing from third-party platforms, potentially costing them more of their hard-earned money for the same exact room.
Fragmented Customer Service:
J.D. Power's latest analysis highlights that customers who book directly with hotels report higher satisfaction due to easier service management and streamlined issue resolution (J.D. Power and Associates ). Third-party bookings complicate communication, as requests and complaints must go through a middleman—the booking agent— which slows down resolution times and often leads to guest frustration. On top of that, the analysis also found that direct bookers receive much more prompt responses to service requests than those who chose to book through third-party sites.
Increased Risk of Cancellations and Overbookings:
Hotels prioritize guests who book directly with them rather than third-party websites when it comes to the common scenario of the hotel being overbooked. A study from Cornell University's School of Hotel Administration showed that hotels walked (relocated them to another property, often further away) third-party bookers up to 39% more frequently than direct bookers during periods of overbooking (Liang, Cornell University ). This is due to hotels wanting to prioritize their loyalty members and the fact that they make less from your booking due to the OTA’s high commission fees. A.k.a, you didn’t book through the hotel, so you’re last on the waitlist.
Profit for Hotels: How Booking Direct v. Booking Third-party Affects Profits:
Due to the popularity and convenience of third-party booking sites, many hotels have their rooms listed on OTAs – but this does not mean they gain a higher profit by doing so. Commission rates can range anywhere from 15% to 30% of the booking total. This means that the hotels themselves are losing out on that amount of revenue when the customer chooses not to book with them directly. When it comes to smaller, boutique hotels, this can be detrimental to their profits overall.
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The Unmatched Benefits of Direct Booking
Exclusive Deals and Offers:
Directly booking with hotels often permits access to better rates and exclusive member perks that are not provided by third-party platforms. This can include room upgrades/changes, free parking, late checkouts, complimentary room service or breakfast, and other value-added services that significantly increase guest experience overall. Basically, when you book direct, the hotels want to reward you.
Loyalty Rewards:
Booking directly is the only way to earn points with hotel loyalty programs and earn status, which can result in free nights, discounts, complimentary gifts, room upgrades, and other benefits. According to SevenRooms, nearly 44% of frequent travelers prefer to book direct in order to take advantage of these loyalty programs, rather than book with a third-party (Esmond, SevenRooms ).
Personalized Service:
Direct communication with the hotel allows for a more tailored experience for the guest. Special requests regarding room selection, views, dietary needs, and amenities can be more easily accommodated when the hotel's front desk staff manages the booking process directly. You’re more likely to receive white glove service by the hotel when there are no hoops to jump through. In turn, this leads to a more personalized and satisfying stay for the guest overall. So if you’re booking for a special occasion and want that extra level of service, don’t expect it if you’re booking through a third party.
Leveraging Technology for Smarter Booking
The Guestbook Extension:
Because of everything laid out above, our team at The Guestbook decided to add one more reason to book direct (just to make it an ever sweeter deal). We went ahead and built what we call The Guestbook Extension – a browser extension that allows guests to “triple dip” their points only when they book direct. This means you can now earn your credit card points, your hotel loyalty rewards, AND 5% cash back at over 60,000 major chain and boutique hotels around the world. We set out to make it clear that there should never be a reason that booking with a third party is more attractive than booking direct through the hotel. Finally, everyone wins (well, besides those mean OTAs).