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Are hotels paying out too much for online bookings?

30 April 2005
Are hotels paying out too much for online bookings?

An internet entrepreneur has warned hoteliers that choosing the wrong online booking company could leave them out of pocket.

Liam Lyon, who runs his own site, hotelscomparison.com, from his bedroom, believes that comparison sites, which pool various online bookers, are a cheaper and more reliable method of targeting customers than a Google search.

Lyon, who set up the company two years ago, said: "Bookers that rely on being picked out by Google are playing a lottery.

To get near the top of a list they have to pay search engine optimisation companies (SEOs) a lot of money to tweak their sites so that they are picked up."

He added that Google regularly changed its technology to avoid such rigging. Not only did this mean a hit-and-miss search, but the price booking companies paid SEOs to push them up the rankings was passed on to hotels.

Lyon said that the cost of the other option - paying for a sponsored link at the top of a Google results page - would also be passed on. "The cost per click can be anything up to £3.30 for popular destinations such as Paris and Barcelona. It's a dying model and can be a waste of time and money."

Hotelscomparison, which turns over about £8,000 per month, searches 16 online bookers and lists sites in ascending price order. It makes its money by charging an average of 5% per booking.

A spokesman for online booking agency Alpharooms said that comparison websites provided a more transparent shop window and were the future of online booking. "A lot of our strategy focuses on comparison sites," he said.

But Roger Smith, director of marketing at Accor UK, was more cynical. "Comparison sites bring another element to the equation but the real question is whether companies will eventually pay for a priority listing on them like they do now on Google."

He also warned that a more transparent booking system could have big implications for the hotel industry. "Consumers will see incoherence between rates at individual hotels," he said.

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