Another squeeze to accommodation profit margins
Recently price-driven accommodation site Wotif announced they’re changing the billing process, passing on the burden of associated credit card fees to the accommodation provider. The company is promoting the change in support of its accommodation operators, by helping cash flow with quicker access to the revenue.
On the whole, our clients don’t seem to see it this way, instead seeing it as another squeeze to their bottom line.
With the weight the company has across the continent, I dare say it is just one of those things accommodation providers will have to live with. As a former hotelier and current hotel marketing consultant, I know that these kind of changes will raise question as to how to compensate for this change.
For many larger operators this comes in the form of a credit card surcharge, although it seems this is not yet common for smaller operators. This practice has been used for many years in the aviation industry, with what seems like steady increases in the fees over this time. As a consumer, I don’t particularly like it. It seems slightly dishonest. I’ve selected my rate, now why should I pay more because I use the most common payment methods in the world? I’d much prefer to see these fees accounted for within my initial rate. Of course, that’s just my personal opinion.
If you are an accommodation operator charging, or planning to charge surcharges for using a credit card, it’s important to note you could lose out in the end. In recent months I’ve been told by many fellow travellers they now book with Expedia or another third party to avoid paying the credit card fees. I decided to take a look into this when booking my last trip. And they were right.
In an effort to maintain rate parity, I found that many of the major hotel groups were showing the same rate on their own website as the third parties. The difference being that when booking through Expedia, you do not incur the credit card surcharge. For example in one instance, by booking on Expedia rather than direct, I saved $17.44. The hotel paid at least $87.20 in commission. The result, the hotel is down by at least $69.76.
Hoteliers should remember that with the Internet, price checks like this are quick. Consumers are increasingly savvy and switched on to how to get the best bargain. If considering a credit card surcharge, I’d ask you to consider if you may be losing out and. more importantly. are you putting your customers off coming back?
Image: James Hacon is the director of digital marketing at Fastrack Group, a company that specialises in digital marketing and communications in tourism and hospitality based businesses. His experience spans across media, marketing and management roles within the travel, tourism and hospitality industry in the UK, Spain, Australia and New Zealand.
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