Auctions are a great place to find amazing values on goods or an object being sold to the highest bidder, but what happens when this model transitions into the hospitality and travel industries? A new hotel booking site, Bidroom, is attempting to re-create the current Online Travel Agency (OTA) model by introducing the reverse auction model.
You may be asking yourself, what is a reverse auction model? Well, instead of a group of travelers bidding on a vacation accommodation, these individuals are asked to fill out the basic details of their stay (arrival/departure dates, number of rooms required, etc.). This information is passed along to local hotels in real time, inviting them to provide their best offer, essentially bidding against other properties for a customer.
A 24-hour countdown clock helps both the traveler and hotel stay focused on making a deal. Typically, these prices are lower than those offered by big booking sites and hotels are receiving direct bookings in the process without a commission charge.
As if the bidding process were not innovative enough, Bidroom is attempting to wipe the slate clean by being the first to offer this model to travelers FREE-OF-CHARGE.
How can the company expect to make any money it the service is free? Co-founder Mark Bradshaw explained that because Bidroom is a platform, rather than a typical travel or booking agency, the running costs are much lower than those of a traditional OTA.
In the future, Bradshaw hopes to consider following the lead services like Gmail, Skype or Facebook, whereby small advertisements run alongside the content or the webpages. Ultimately, he expects to keep the core service free of charge.
Why the New Business Model?
Over the past decade, the presence of OTAs has grown considerably. Many hoteliers recognize their marketing benefits and find them to be a great way to fill rooms. However, high commission rates and a lack of loyalty from direct bookings make it a challenge to compete in such a busy online marketplace.
Bradshaw believes that if hotel prices through Bidroom are 10% cheaper than a traditional OTA, both customers and hotels will be better off, and his independent platform will grow.