Do you wish to venture into the hotel business? I know, what you are thinking. Hotel is not an easy commerce. It’s expensive and more expensive to acquire the properties at a strategic place to build your hotel empire. Besides that, can you overlook the hassles of managing a hotel?
Perception is –the hotel is an expensive business and not everyone can think about venturing into it.
Agreed, but you don’t actually need to invest a fortune to start a hotel business these days. You can venture without even owning a single property of your own. You can start a hotel booking business with a decent website and a powerful room booking system by your side.
This article is about various ways to venture into online hotel booking business and making some great money out of it. We will talk about ways to create a nice hotel booking website and powering it with a room booking software, which will manage different in-house verticals and your customer relations as well. We will also look into various online hotel booking business models and identify the ones you can easily capitalize on without spending a fortune. Here is our stepwise breakdown of the strategies and the knowledge base.
Understanding the existing online hotel booking market
The online hotel booking industry is more of a subset of online travel and tourism industries. Every advancement in these two markets has a direct impact on the online hotel booking market. Despite a big global market, the online booking sector is actually pretty fused. Only a few companies rule the sphere in their segments. It’s not that new entrants are not coming up with great plans, but as soon as they grow bigger, big companies acquire them on lucrative terms.
Take the online hotel-booking sector in the US for instance. The likes of Expedia and Booking holdings dominate the market. The two giants cover up to 95% of the market in Europe and the USA. There is TripAdvisor, which is also a big name in the travel and tourism sector, but it’s not actually a hotel business. It relies on Advertisements to make money.
Besides these, Airbnb’s business model is also the biggest uprising, which has actually started a different genre in the travel and tourism sector. I am talking about the entirely new yet a massive market for vacation rental home booking.
Best business models to consider for your online hotel-booking platform
Though businesses operate in various models and use numerous revenue channels to make money, bookings are always a constant among all of them. All these businesses, directly or indirectly, use a room booking system, marketplace commission management, Advertisements, and feedback management to operate competently. Keeping this in mind, let’s understand the business models of top names in the market, which you may opt to integrate into your own website for hotel booking, too.
- The Agency model
This is a business-to-business marketplace model where hotels pay commission to the online platforms for bringing direct bookings from the customers. Such platforms manage the bookings by themselves and prevent the hassles of maintaining an in-house room booking system for the hotels.
The hotel owners can sign up and list their properties on the website. Approved hotel owners get dedicated dashboards from where they can manage their bookings, earnings data, and other analytics.
- The merchant model
This is the wholesale model of the online hotel booking business. The online platforms purchase rooms in bulk from the hotels and sell the same to customers with a margin. The platform is a merchant who brings customers for the hotels but is free to charge as per their preferences. They don’t share the revenue with the hotels but give them a fixed price in advance while purchasing the rooms in bulk.
The hotel owner in this model may or may not have their in-house room booking software but they have to sign up on the platform to manage the bookings. The source of revenue for such platforms is the margin between the retail and the wholesale prices of the rooms.
- The advertisement model
Platforms on this model function more like an advertisement platform for other hotel booking platforms. These platforms make money by advertising other hotel websites (both aggregators and dedicated websites) on the platform. The platform may use features like price comparison to attract visitors. In return, the partner hotels or booking platforms pay as the advertisement bids.
Please note an ad-based platform does not manage the booking or possess a room booking system of its own. Instead, it simply offers the information to the customers and re-directs them on respective booking platforms for the booking and transactions.
Example: TripAdvisor, Trivago
- The peer-to-peer rental marketplace model
P2P is the newest but possibly the most profitable online booking business model. The biggest example in this model is the Airbnb. There is a reason why we call it rentals, and not hotels. As the name suggests, it works on the peer-to-peer model, which means it’s not necessary that a listing on Airbnb is always a hotel. They can also be privately owned rooms and houses. Anybody can list their properties, rent to the travelers, and make money.
Airbnb is a marketplace of hotels and homestays. The platform makes money from a two-way commission model. It charges commissions and transaction fees from both property owners and the guests.
Plan your website development
It’s a no brainer. You have to decide the business model you want to operate on, and then decide the features you want on your website accordingly. Both the website suite and the revenue models will differ from model to model.
For example, if you want to operate in the advertising model like Trip advisor, you need to develop your algorithm for the advertising on the platform. Alternatively, you can integrate popular Affiliate Network APIs like ZUMATA Hotel Booking API or Expedia Affiliate Network API.
Similarly, if you want to operate in the P2P rental marketplace model like Airbnb, you need dedicated features for hosts, guests, and the admin. Besides this, you need an algorithm for commission and payouts management.
These are just a few of the important aspects that change as per the selected business models. You can achieve the overall plan and cost estimation of the development in two different ways:
- Research, identify important solutions, and develop from scratch.
- Research, identify important features, and build from a ready-made script.
If you think, you have a unique business model you cannot implement from any of the above-given models, the best way to develop your booking platform is coding from scratch. It’s not easy to carry out the entire task by yourself though. You should either hire a team or outsource the project. Here is a breakdown of the features and solutions you need to develop if you are going from scratch.
Features of a typical hotel or room booking system
Since hotel booking platforms involve Admin, Hotel owners, and Guest, we’ve classified the important features into three categories:
Features for Hotel owners
- Registration and login
- Hotel listing system
- Booking management system
- Availability switch on/off
- Payments management system
- Reviews and ratings
Features for Guests
- User profile management
- Search interface
- Search Algorithm
- Search Filters
- Dashboard and booking system
- Chat and communication with guests
- Reviews and rating
Features for Admin
- Site administration
- User management
- Hotel management
- Listing management
- Revenue channels (Ads, commission, wholesale)
- Commission management (if any)
- Block/Unblock users
- Ban/unban hotels
- Chat/communication with users and hotels
Technologies to build a room booking software suite
As per the latest trend and popular stack, the following basic sets of solutions are crucial to building a complete suite of room booking system and platform:
- Android Apps for Guests
- iOS Apps for Guests
- Website Front-end for guests
- Front dashboard for hotel owners
- Admin panel (Back-end)
Besides this, the following solutions are good to have to make the platform competitive:
- Different Payment Gateway APIs
- Push notifications tool APIs
- Email Marketing tool APIs
- SMS notification tool APIs
- Any decent CRM tool API
- Content Delivery Network (CDN)
How much does it cost to build a hotel booking system from Scratch?
Setting up a hotel-booking platform is not a tough job, but when you are building it from scratch, you are required to take care of every small and large expenses. Though the cost of website development is not as costly today as it used to a few years back, considering development cost as low as $50/hour, a fully functional room booking system (web and mobile applications) will poise to take at least 2000 hours of development from scratch. Hence, such a development will easily cost up to $100,000.
Here is a breakdown of the time and cost aspects for your understanding:
How Readymade hotel booking Scripts could be cost-effective?
These days, ready-made solutions make the most of the software solutions in the market. Take SaaS for instance; a completely separate business domain that is driving the software industry by the storms. In this era of ready-made solutions, ready-made scripts come out as the best way to save huge on software developments.
The best part is ready-made scripts are also available with open-source code access, which makes them as efficient as the solutions developed from scratch. Like every popular business idea, there are ready-made scripts for starting a hotel booking business, too.
You can simply use a ready-made room booking software and set up your platform without even coding it from scratch. You can save huge on coding, research, testing, and deployment. When everything is ready-made, you just need to install the script on your preferred web server to get your website up and running using a simple graphical user interface.
A good ready-made script from a decent software vendor can offer you the following benefits to make your task easier and cost-effective:
- Open-source code access
- Free Installation from vendors
- Free Technical Support from vendors
- Free upgrades and patches in warranty period
- One-time payment/no-recurring fee to own the source code.
There are decent room booking system scripts to build any kind of hotel booking marketplace. It doesn’t matter which business model you want to follow there is ready-made room booking software for every model. For example, Airbnb clone, TripAdvisor clone, and Trivago clone, etc.
With similar control and flexibility like custom-made solutions, building a hotel-booking website with a ready-made script could be a more economical alternative if the popular business models in the market inspire you. There are ready-made scripts in the market for as low as $1000 to get you a full fledge website in a few hours of setting up and deployment. Hope this content helped you find better alternatives to costly development processes. Would love to know your views on the same.