Consumers are now so comfortable booking non-refundable hotel stays that it’s time that travel agents get access to these ‘best-in-market’ rates, according to a new supplier.
Fastpayhotels has been set up by Alex Gisbert, who has left Lowcost Travel Group where he was chief operating officer, to establish the B2B start-up.
With “millions of euros” of funding from Spanish private investors, the Majorca based firm is seeking to sign up hotel and agent partners globally.
As of launch this week, it has 2,000 city and beach hotels and expects that to rise to 6,000 by the summer, with core destinations being Europe, the Caribbean and Latin America.
Gisbert, a former Expedia regional director and Travolution Awards Rising Star, said agents find it increasingly hard to compete when customers quote prices they’ve seen on OTA sites.
“What we are trying to do is leverage a growing trend of consumers buying non-refundable deals and drive a better set of quality inventory to travel agents.
“Our formula is what low-cost carriers did to traditional airlines where you pay upfront and can’t cancel or modify.
“It’s online, super simple and a hell of a lot cheaper. The challenge is how to move the model to give travel agents the upper hand, to make them more competitive.
“It’s giving them a chance. Is it better that the customer clicks away from the website or walks out of the shop?
“Not all customers will like the payments conditions or cancellation terms, but our job is to get the best prices to the agents.
“More and more agents are leaning towards non-refundable rates and more and more consumers are comfortable understanding they offer considerable value.”
As well as being offered “aggressive” rates for upfront payments, hoteliers are also not going to put agents on fixed rate contracts on stop sell as prices rise.
This could be particularly vital this year as popular destinations considered safe by customers like Spain become booked out and rates rise above those contracted.
“If you look at places like Spain and Portugal, I suspect some of the traditional buying methods are going to suffer from stop sell and lack of availability,” said Gisbert.
“We are talking about the sort of rates similar to that which large tour operators used to get of old when they were putting down deposits and money guarantees.
“Hotels are prepared to give us some pretty aggressive rates. We are not asking for exclusivity. If any other player decides to pay at time of booking they will get them.”
As the name suggests, the key difference with Fastpayhotels is that it will pay hoteliers within 24 hours on sales up to 390 days in advance.
The firm is working with a new payments supplier that has the technology for payments to be reconciled “at double speed”, said Gisbert.
He described the model as “link Wonga for hotels”, with the promise of guaranteed pre-paid income meaning they can invest in improvements or expansion.
“The better you treat the hotel, the better your pricing and availability is going to be,” he said.
“We are making a very slim margin off every transaction. It’s as close to agents paying hotels direct as you can get.”
Through Fastpayhotels’ XML interface, hoteliers can control dynamic rates through an extranet while agents can sign up to get a log-in to the system at fastpayhotels.com.
“Moving to dymanic rates mean hoteliers will never close you out, all they do is increase the rate giving the chance for agents to have similar or better availability than some OTAs.
“In a market that’s as fluid as ours that has geo-political problems where availability is running out the more dynamic you are the more likely you are to pass on better availability to your agents.”
The other advantage of passing on only non-refundable rates is that Fastpayhotels itself will be able to operate at a fraction of the cost of traditional trade suppliers, added Gisbert.
“With 30% to 50% cancellation rates, most bed banks have huge finance and operational teams that make up probably the lion’s share of staff costs.
“We do not have that. It allows us to be quite agile in the way we work and it allows us to operate on incredibly slim margins.”
Gisbert said Fastpayhotel employees currently number seven and he expects this to increase to about 20.
“Clearly we aim to offer fantastic service [to agents] but with rates that cannot be modified there is a limited amount of interaction required.”
Gisbert vowed Fastpayhotels will not do distribution deals with other intermediaries, a practice which is rife among bed banks, and will focus on agents who deal with customers.