Online platforms take significant percentage of hotels' profits

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Hotell Hilton. Source: Siim Lõvi /ERR

A recent report published by Eurostat shows that in 2019, hotel guests in the European Union booked more than 500 million nights via online platforms such as booking.com and Tripadvisor. Their impact on the hotel market is also significant in Estonia.

According to the survey, up to five million hotel nights were booked in Estonia in this way in 2019.

Kaisa Mailend, CEO of Hestia Hotel Grupp, which owns hotels in Tallinn, Haapsalu and Riga, told ERR that the share of customers coming through booking.com depends on both the season and the hotel.

Mailend said the share of customers using platforms has increased over time and said that this is due to the ease of use. "Especially if the visitor wants to find a suitable place to stay based on region or location, choose a hotel of a different price level and quality, compare prices and pay in one environment based on their customer account," she said.

Mailend said booking.com's commission is confidential but close to other similar platforms. She said it depends on many factors such as campaigns and volume.

Mailend said that booking.com does not affect room prices, but they depend on demand and competition for the specific time period.

Verni Loodmaa, chairman of the board of Tartu hotels London, Pallas and Sophia, said that the share of booking.com and other similar platforms in bookings has increased year by year, but in the case of individual customers, it could be around 30 or 40 percent.

Loodmaa said that this is due to the great convenience of such pages for customers and also the ability of large companies to advertise themselves. For example, booking.com is one of the sponsors of this year's European Football Championship.

He said that on the one hand, such services bring more customers, but at the same time they sometimes charge a significant amount. The commission paid by the hotel depends on the specific agreement between the companies and also on the location of the hotel. He said that in larger cities, fees are usually higher.

Loodmaa said that currently booking.com and other similar sites are inevitable, but hotels are also trying to get customers directly from the website to book rooms. Adding that the customer gets the best price and the fee goes directly to the service provider, not abroad.

Ain Käpp, chairman of the board of the Estonian Hotels and Restaurants Association, told ERR that although there are still few customers due to the coronavirus, especially from abroad, in the pre-crisis period 40 to 60 percent of customers came through booking and other platforms. He also said that the growth has been fast, for example, in 2010 only half of the current volume came through these platforms.

Käpp said that booking.com charges 15 to 18 percent commission on its businesses. At the same time, he found that the benefits outweigh the harms: "If someone offers you a million but wants to pay back 150,000, you would."

Käpp said that booking.com and other platforms have made hotel business more efficient, as bookings go directly to the hotel system.

Customer attitudes have also changed. "Customers no longer book a place at home, but when they arrive in Tallinn," Käpp said. For hotels, this means that at the beginning of the month it is not known how many customers are expected and hotels must always be ready.

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Editor: Roberta Vaino

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