Growing Disquiet Amongst Hostel Operators
Following the recent news published on STAY WYSE regarding the increase in commission by Hostelworld, the online travel agent for hostels, the association has been informed of a number of positions currently being taken by National Associations around the world.
Whilst acknowledging the important role that OTAs play, the Backpacker Network Germany have suggested in a letter to its members to pass the increase in commission on to their consumers. Please click here to read the letter from the Backpacker Network Germany.
Israel Hostels (ILH), a group of independent accommodation providers in Israel, have informed Hostelworld/WRI that the group will be restricting inventory throughout March 2014. Please click here to read the letter sent to Hostelworld. ILH have to date not received an official response from Hostelworld on this matter.
Whilst STAY WYSE cannot comment individually on these actions, which are subject to contract and/or national legislation, it highlights a growing concern and frustration within the industry. STAY WYSE has contacted Hostelworld regarding this increase and will post their response when it is received.
Robert Henke, Operations Manager of YHA Ltd in Australia and Hon Secretary of the Backpacker Operators Association New South Wales said;
“This commission increase doesn’t come as a surprise; it brings Web Reservations International (WRI) – owners of Hostelworld and Hostelbookers – in line with Priceline (trading as Booking.com and Agoda). WRI is owned by an American private equity company and Priceline is publicly listed, therefore their initiatives are, and always will be, predominantly dictated by the return-on-investment requirements of their financial backers. Although the commission increase by 20% that WRI has now announced is very steep, it makes no sense to single them out. There is a need for a sensible reset to be found in a relationship with all Online Travel Agents (OTAs) which, over time, has become less and less commercially balanced as mentioned in the Sydney Declaration that was adopted at WYSTC in September 2013.
This increase is another stark reminder of how important it is for hostels to do everything in their power to encourage direct bookings so that they do not become even further dependent on third-party websites. Hostels operators must become more savvy about proactive channel management. Who knows when these OTAs will next increase their commission rates?”
STAY WYSE will be hosting a session at ITB Berlin on Online Distribution Channels: OTAs vs Direct Bookings. We would like to invite both operators and OTAs to join us to discuss the importance of OTAs for bookings and how hostels can potentially win the battle for direct sales.
The seminar will present the latest findings from the STAY WYSE research, looking at the supply and demand side of third party bookings. In addition it will also present some strategies on how operators can increase their direct bookings.
Join us in the Youth Travel Hall (4.1) at ITB Berlin on Friday 7th March on the Big Stage at 10:30 to 11:30.