Think Booking.com and Expedia are netting you killer savings? Bidroom, a relatively new booking service on the block, is here to shake things up with its zero-commissions model.
Bidroom is one of the latest online travel agencies (OTAs) to hit the international market, offering a twist on the traditional OTA formula. Bidroom's pitch centers on the elimination of commission fees for hoteliers, which in turn allows travellers to enjoy competitive discounts.
Ever since the advent of the internet, and mostly around the early 2000s, online travel agencies began pickup steam. It has grown exponentially ever since, and the online travel market is estimated to garner $1,091 billion by 2022, registering a CAGR of 11.1% during the forecast period 2016-2022.
AMEinfo spoke with Michael Sols, PR Manager at Bidroom, to learn more about what his company is bringing to this high-potential market, and the benefits in store for both hoteliers and travellers.
1. Bidroom seeks to differentiate itself from other OTAs by proposing a commission-free model. In what other ways is Bidroom unique, and can you elaborate on these points?
Ah, my favourite! Let's start by comparing Bidroom's membership model to an industry-standard OTA commission model:
Under our membership model, hotels connected to the platform only pay if we generate for them 15 x the membership price. Consider this:
In my opinion, the winning formula for our hoteliers is = no-commission (more revenue) + membership-based partnership (revenue first - pay later).
2. How does Bidroom's business model work and how does it generate its income if it does not charge commissions?
It's a growth-based business - like Amazon Prime, Netflix, or Spotify, which we study eagerly.
i) (B2B) Hotels register with Bidroom under a one-time activation fee of €299 per property
ii) (B2B) They pay the membership price according to the hotel size (5 levels, starting from 50 rooms up to +200 rooms) but only after the hotel receives enough revenue
iii) (B2C) Travelers purchase a subscription to book hotels with discounts of up to 25%. 3 plans are available: €3 monthly; €29 annually; €99 for life
3. Can you tell us more about your company and how it started? How did the idea behind Bidroom come to be?
Bidroom was founded in 2014 in The Hague, Netherlands, by Michael Ros (COO) and Casper Knieriem as an answer to their hotelier-prospects who were exhausted by ever-raising commission-based revenue loss their hotel chains faced. At the same time, both had extensive sales experience and a keen interest in hotel technology, which was a common subject of their conversation with clients.
They found a niche in Software-As-A-Service (SaaS) hotel booking, where no big OTA has gone before. Weeks of careful calculations had shown that a membership-based platform could work if the growth was substantial. We're doing our best for that to happen. Right now, Bidroom connects over 120,000 hotels from 128 countries with the ambition to reach 1 million active users in 2020.
4. Can you give us some examples of savings users of Bidroom can benefit from?
Sure. Imagine that you're booking a 5* hotel in Barcelona. Booking's price could be €400 per night under a hidden 18% commission. Thanks to our technology, Bidroom's price for the same hotel could be €375 per night with no hidden commission - it has to be lower from what our competitors have because that's our tech DNA. The lack of a commission charge for the hotel is where the discount comes from.
There's the question of the membership price. I believe that €3 monthly is reasonable enough for a test-run. Under all plans (€3 monthly; €29 annually; €99 for life), the more you book, the more you save, as there's absolutely no limit on the number of bookings you as a traveler can make. Sounds complex, but also exciting - doesn't it?
5. Bidroom seems to put a lot of emphasis on the interests of the hotelier. How do you balance this with advantages for your customers?
The emphasis comes from our founder's deep understanding of the hotelier market. That, and the fact that we have 3 ex-hoteliers from Appollo Hotels in The Board of Directors that was formed last November.
Customers benefit from guaranteed best prices for hotels globally with discounts of up to 25% - as compared to Booking.com, Expedia, Hotels.com, and Agoda.
As our hotelier partners avoid abusive commissions, they're eager to provide an extra discount of their choice to our travel community. It's also essential to underline that because Bidroom is a private platform, all hotels are free to advertise room prices of their liking without any rate parity breaches (= no public advertising of rates lower than what's offered by the OTA that enforces the clause).
6. When did you enter the MENA market, and what has your experience here been like? Any major takeaways and notable trends?
Our core strength is mainly in the European market. We've expanded into MENA just in 2018 and are forming partnerships in the financial sector to fuel growth. We call the profile of our users for the region "Travel planners" - people between 33-55+ years of age who visit countries like the United Arab Emirates or Morocco for a particular occasion such as bleisure (business and leisure), holidays, anniversaries, or the honeymoon. In time, our group of MENA travelers will surely expand - we sent our best to the Arabian Travel Market 2019 conference in Dubai for high-profile networking.
7. Are you using technologies like blockchain just yet, or looking into it?
Soon enough, we'll be joined by the right technology-wise person with extensive R&D experience to address potential avenues like blockchain. For now, we're unsure of its application for online hotel booking. And even with all the talk around the world, only a few put the effort into exploring Blockchain. Large-scale IT support is needed, and hoteliers are preoccupied with perfecting their digital marketing for direct website conversions. There's Casual Hotele, a Spanish chain, that introduced Bitcoin payments around March 2019. Let's see how that goes.