We predicted it and now it is here: Early Payment Benefit of Booking.com arrives in Spain

Revenue 14/02/2019
a person is playing a game of checkers with their finger
Booking.com is already applying a new feature called Early Payment Benefit to some hotels outside of Spain . Camouflaged under the guise of a price improvement for advance payment, as its name suggests, it is actually an automatic discount application system to resolve negative disparities with other channels, including direct sales, the official website .

How Early Payment Benefit works

Its operating mechanics are simple to explain and will be familiar to hoteliers, as it is not too far from the solutions that they themselves implement to combat OTAs. In short, Early Payment Benefit , from Booking.com , is nothing more (nor less) than an automatic price matching system via unilateral discounts , which are applied when significant disparities are detected in any other channel, including the official website of the hotel. In other words, when the time comes to show the price to their users, they run a comparison to locate cheaper channels and, if they find them, they apply a discount to continue offering the best price online and thus ensure the reservation.

  • Where it works : Dubai, Chile, Argentina… It is difficult to specify. Not yet in Spain, but we have to be careful because it can arrive at any time.
  • Who is activated : only for certain hotels that have the payment option through Virtual Credit Cards, and not in all searches.
  • What cost does it have for the hotelier : Booking.com deducts the amount of the discount from its own commission. Their clients pay them 100% of the reservation and the hotelier only suffers the POS commission (2.5%) when making payment with the virtual card.

How to know if you have been activated Early Payment Benefit

The best way to detect the activation of Early Payment Benefit is to closely monitor prices and disparities through the use of a Rate Shopper. In this case, for example, alarm bells went off when one of our international clients informed us that Price Seeker v3 was not correctly displaying Booking.com prices.

Initially, it was very easy for us to corroborate through the screenshots provided by the tool, and through manual searches, that apparently everything was in order, the prices did agree with the screenshots. However, our client insisted that, on many occasions, this was not the case.

We began to pull the thread with the sole intention of understanding the origin of the errors and decided to carry out a validation by launching a battery of consecutive searches for the same hotel and the same dates. That's when we find something unexpected. From Booking.com we received different prices very often, and we knew that our client had not made changes.

How to Combat Early Payment Benefit

There are different ways to deal with this new Booking.com strategy. First of all, as we mentioned, its activation must be detected. Once “the problem” is located, at Paraty Tech we suggest different alternatives:
  • The first, and simplest, is to directly request Booking.com to deactivate this functionality , by contacting their Customer Service.
  • Another option is to implement a price equalizer with OTAs that allows the prices shown by the reservation engine on the official website to vary in real time. Parity Maker , for example, does it according to a certain previously configured business rule and is a guarantee to regularly position itself as the most economical sales channel.
  • We also recommend adding additional privileges to the rooms, available only through the direct sales channel . If you cannot compete on price, a differential value will have to be provided to reservations made through the official website. The idea is that, by paying the same amount, customers enjoy a more complete experience: flexible conditions, additional services, exclusive advantages, etc. Whenever we talk about disparities, it seems that only those related to price are taken into consideration, but there are other forms of disparity that we can turn into strengths.

Parity Maker vs Early Payment Benefit

Parity Maker is our real-time price matcher . Completely integrated with the reservation engine of the official website, it allows the hotelier to configure a business rule that conditions and determines when the tool should go into action. Similar to Early Payment Benefit, Parity Maker runs a comparison in the background while showing the user their search results. If the requirements of the established business rule, for the same search parameters, match the circumstances that are occurring in the selected OTA, Parity Maker applies a price reduction in real time . The user is informed of the price improvement they have just experienced through an animation and an alert popup. In this way, on the one hand, it guarantees the best online price and, on the other, it prevents the user from leaving the official website to compare .

Parity Maker business rule example : When Expedia.com is 5% cheaper than my official website, match my price to Expedia.com

The importance for the revenue manager of having a powerful and reliable price comparator is now unquestionable. Only in this way is it possible to anticipate the market with regard to decision-making, but also to detect situations such as the one we are dealing with at this moment and respond to them with agility and strategic sense.

Price Seeker v3, our Rate Shopper, is now capable of detecting Early Payment Benefit. Currently, we are working to have the tool also report the nature of the detected disparity, monitoring the price before and after the application of the discount. By combining Price Seeker v3 with Parity Maker we can minimize Booking.com's latest strategy to irrelevant levels

Everything seems to indicate that the OTAs have no intention of abandoning their frontal battle against direct sales, knowing that the current action plan of hotel establishments, always linked to the most advanced technology and the best professionals, constitutes an uncomfortable opponent for they. A rival that continues to invest resources to claim an ever-larger piece of the pie, a portion that it knows belongs to it by right. And that a giant of the stature of Booking.com continues to show signs of feeling threatened is, without a doubt, a good indicator that the hotelier must be doing something right.