How Do Online Booking System Works?

One of the long forgotten source of booking is the direct source of booking with any hotel. This is the most profitable source as there are no commission payable on such bookings more over the client picks up the direct source of booking which ensures a long term business relationship with the hotel & brings in the possibility of repeat guest. Spotify 1.1.2 DigitalSoftw In today’s scenario we are been dominated by the online distribution channels. With digitalization, the world is a very small place with immense competition. Leisure travelers are increasing year after year with the whole world to pick from. It’s very important that you stand out in this competition & make the best of business possible for yourself.    

Understanding Business Source:

The business source & the market segment that you can target is beyond imagination. Every hotelier is willing to have a brand name set for his property & maintain the value matrix for his hotel. In line to the modernization & the digital world taking over it is easy to have you r digital presence but at the same time it is also challenging to stand up to the competition. Key word optimization is also a no go in most of the cases as the key words for the hotel industry is saturated & you really need to think out of the box to have a success in this mode of promotion.

The other ways that people work towards are ad words which also works well but it all comes with a cost which mean smaller properties can’t effort these. What is the way out then? The most important think is what we are trying to achieve here. All that we are looking into is the materialization or conversion of traffic on the website in to revenue, & to do this we fist need to cater to the needs of the client using these platforms. Also find out what are the other platforms a client would prefer & why. To do this lets analyze the scenario step by step.    

Overview of Online Platforms Available:

The various platforms now available to travelers are Online Travel Agents. Global Distribution System, Offline Travel Agents, Corporates, Chatters, ad words, Direct Booking Engine & Meta search engines etc.

Online Travel Agents:

These are the currently prominent source of business for hotelier for various reasons. They do have a wide range of customer base which help in the conversion ratio which is what the hoteliers in India, Srilanka & the Middle East depend on. The OTA costing works to a per booking commission cost that to vary from 12 % to 30 % based on the sector your hotel belongs to. The strong points for this platform are

  1. Variety property types to choose from.   
  2. Easy online payment options
  3. Customer loyalty benefits
  4. Instant customer support
  5. Adons purchase option
  6. Deals & Promos
  7. Large customer base

Global Distribution System:

This is the older form of online reservation system that was in action during the early days of computerization. GDS simple use to connect the request to the requested service provider’s data base which would give a real time availability to the booker & he could get booking done for his flights, Hotels & Car Rentals. With the growth in digitalization every vendor has chosen to have a direct sale channel opened up. The GDS costing are as follows the Setup would cost you a $500 & per booking anywhere between $12 to $75.    

Offline Travel Agent:

These are just travel desk operating as travel agents for various properties. They have a contracting with the hotelier & fix their negotiated price for the rooms & usually target for bulk bookings from groups or fully paid packages. They usually operate 10 to 30 % margin, They would market your hotels on their custom build websites.


Due to business expansions or various other prospects business travel is a considerable chunk in the hotel industry. As any corporates cost cutting is a must when it come to business travel, This is what gives rise for corporate tie ups with hoteliers. In this concept a particular corporate firm signs an agreement contract were in discounted rates are been fixed that would remain fixed right round the year. They usually work around the margins of 10 to 20 %


These are tour operators who set up their teams in tourist destinations were in they look into an entire package that involves flights, accommodation, meals & sightseeing. These are mostly long stay guest ranging from 15 to 90 nights stay. These companies have a agreement with the hotels for a fixed price which could be between 35 to 40 % & they only operate in season time based on each geographical region.         

Ad words:

This is been the latest trend for marketing your own Brand website & to show the various offers & deals you have to offer to customers on the search engines. This is done with a cost in two ways

  • CPC ie Cost Per Click this is were you pay approx Rs: 20 per click
  • CPA ie  Cost Per Accusation here is you have predefined commission like 20 % on every booking


Direct Booking Engine

This a direct source of booking that is available on the brand website of a hotel. The only cost involved in here are the payment gateway charges that could simple range between 2 to 4 % on every booking.

Meta Search Engine:

As there are so many place to pick from for a booking to be made so does the competition creeps in of the Best available price. This is were in Meta Search Engines Like Tripadvisor. Google Hotels, Trivago etc. give you a price comparison view to pick your ideal hotel at the best price. The again come to you at a cost of approx 20 % per booking.    


Now it is necessary to check on the revenue split that you are earning on each of these platforms, this will give you an exact idea of how you need to plan your strategy. Based on this analysis what you now need to pick is what is you max revenue share source & what is the profitability margin in it. Sources like Brand website proves to be the largest profitable source of revenue as it is always the direct source for bookings. But not necessary that this source is bring in revenue for you at the movement.

The strategy that you need to play here is hold on to the bestselling channel & simultaneously optimize your Maximum profitable source with is your direct source of booking & since the market has shifted to the Digital this would become the Direct booking Engine that you will have to concentrate on. All you might be wondering is can I go head on with such big name & brands in the market & still optimize my selling… Well the answer is it worth a try. You need to look at all the feature a booker would look at while making his reservations & make is as much as a one stop solution to the traveler.