Online travel agency Hotel Bonanza has decided to scrap charging hotels commission so it can “guarantee the best rates” for its members.
The platform, which had aimed to take on the likes of Booking.com and Expedia with commission rates of 8%, has now opted to slash commission altogether.
It has also revealed plans to expand into “all travel services”, with flights, transfers, car rental and insurance all to be sold on its site from mid-2019 and launched a £4.5 million investment round.
There will be commissions on other travel services, but hotels will not pay to list their rooms on Hotel Bonanza – in return for a pledge from hotels not to advertise rooms cheaper anywhere else other than their own websites and give Hotel Bonanza customers a 5% discount.
The platform charges customers £10 a year, following a 30-day free trial, to join its Bonanza Club – a closed marketplace giving logged-in users access to Hotel Bonanza’s rates.
Once the other travel services are launched, Bonanza Club will change its name to Bonanza First but the OTA says it will remain “accommodation-led”.
The move is designed to give accommodation providers the flexibility to offer better prices while saving on commission costs, and give them the chance to offer incentives such as free drinks or discounted meals to Bonanza Club members to encourage bookings.
“The industry has wrestled with the problem of high commissions for many years and this is an opportunity to make significant changes that will benefit accommodation providers and consumers in the future,” said co-founder Suzie Barber.
“We need to be able to guarantee the best prices for our members. The best way of doing that is by not charging the accommodation providers commission.”
It’s £4.5 million investment round has been launched in three phases, with the initial phase of £250,000 set to be raised at a valuation of £1.35 million.
Hotel Bonanza is hoping to attract investment from accommodation providers themselves by offering them the chance to invest as little as £100 into the project at a reduced valuation of £1 million.
“We want the accommodation providers who are saving money on commission by using our service to be part of our journey,” Barber told Travolution.