Have you ever gone for lunch with a friend and at the time to pay he or she says, “the tip is on you as I never leave a tip.”
Well, this is not exactly the same, but when you are in business together and there are contracts, you cannot just unilaterally cancel them, and then a few days later come back saying “I am sorry, I will cover a fraction of your losses.”
Why less than 50%? Why not 100%? Or being “fair,” at least 50%? Do we share benefits? Why don’t we share losses too? Especially if the one who made the decision was you.
Let’s make some calculations. Hosts pay to platforms a percentage of their bookings, usually between 5% and 18 %. Some platforms also charge between 12% and 14 % to the customer as a service fee, so the margin is approx between 20% and 22%.
Perhaps my calculations are wrong as I am not very good at maths, however, I have seen some OTAs forcing cancellations at the beginning of the crisis. There was no compensation for the hosts, but the OTAs were charging a cancellation fee. Then some OTAs adjusted their strategy and charged no fee and offered 100% reimbursement.
I have been in contact with many Presidents and managers of Property Managers Associations, as well as with many Property Managers, and they all agree that what happened with OTAs was something unusual, extraordinary, and perhaps outrageous.
With that said, as explained in our last post, OTAs what have you done?, OTAs and Property managers need each other. The recovery of the sector relies on mutual cooperation and mutual respect. How could OTAs recover trust and respect from Property Managers and Hosts? Perhaps trying a sincere apology, but not just with kind words and stingy proposals, if you allow me to say.
If OTAs would like to repair the damage done and regain trust, they should consider sharing losses. If they cannot provide more than 25% or 30% now, for example, consider an additional benefit like 0% commission to hosts for 3-4 months at least, which would help hosts to recover bookings and save some pocket money to compensate for the enormous damage done.
True partners trust and protect each other. What just happened here was a tremendous error, but it is understandable and can be forgiven if action comes with more than “sweet” words. We’re already seeing alternatives in Europe where you can change the amount of the booking by a bonus that the customer has the option to accept or not.
If this post gets to the Board of Directors of major OTAs, here is something they need to consider. Repairing moral damage is not about MONEY, it is about signs and gestures that confirm that there is true repentance and that the lesson was learned. So be at your partners’ side, help them to help yourselves, and only together can the whole sector get out of this with the minimum damage possible.
With time we will all recover and go back to work, but if the moral repair is not accomplished, the partnerships that were formed may not work together anymore.