Hotel Association Finds Unique Solution to Booking Engine Troubles

By Desiree Parker Wednesday, October 05, 2011

After lots of searching, the local hotel association has found a new and unique replacement for its booking engine that cuts out the middle man, keeps tax revenues local and won’t be blocked by the local destination marketing committee.

The Williamsburg Hotel Motel Association has had difficulty over the past few years finding a booking engine for its website, GoWilliamsburg.com, to help customers make online hotel reservations. The Williamsburg Area Destination Marketing Committee (a group of tourism and government leaders that uses a special tax fund to market the area) stopped using the WHMA as the booking engine for its VisitWilliamsburg.com site in 2009 after the engine had some problems. The WHMA went with a different company, but later decided to switch to ARES, the California-based booking engine used by WADMC, to save money and get national exposure. ARES and WADMC have an exclusive agreement, so ARES couldn’t work with the WHMA without WADMC approval, which wasn’t forthcoming.

The WHMA has found a solution to its problems with a unique new reservation search engine called BookDirect by JackRabbit Systems. Unlike a traditional third-party system such as ARES, which books rooms for local hotels and keeps a fee for the service, BookDirect functions more like a search engine for visitors who can use it to find a hotel and then book directly with the hotel’s preferred website, thus cutting out the third-party site.

“By eliminating the middleman on destination marketing organization websites, the hotel is working directly with their customers again,” said Van Luchene, CEO of JackRabbit Systems. “With every customer they book this way they develop a direct relationship, and that means they’re not competing with someone else for the sale of their own rooms.”

“This enhances the hotel’s relationship to the consumer, because the hotel gets to work with the customer more intimately,” agreed WHMA President Billy Scruggs. “Also, all the tax revenue [for room sales] goes right to local governments.”

BookDirect charges a flat annual lease rate for its service instead of using a commission or fee system. Online travel companies such as ARES, in contrast, negotiate wholesale room rates with hotels, sell the room for a retail rate, and then keep the difference as a service fee. These companies pay taxes on the wholesale rate, and a number of local governments around the country have taken the companies to court to get taxes paid on the full retail amount.

This can add up to millions of dollars a year in what governments consider lost tax revenues.

The legislative agendas for all three Triangle localities make it a priority to push the state to tax these companies on the full amounts, which would generate more local revenue.

With BookDirect, not only will local governments get the taxes on the retail cost of rooms booked through the WHMA website, but also hotels will be able to get the rates they desire without losing a fee or commission to a different company.

BookDirect started out in 2010 and is relatively new, according to WHMA Executive Director Priscilla Caldwell. The company currently works with travel destinations that include Las Vegas and all the city and state tourism websites of Louisiana.

About the Louisiana partnership, Luchene said in a press release in January, “This partnership also comes at a critical cross roads for many cities, states, and their lodging providers as their reduced marketing budgets are often split across convention and visitors bureaus, lodging associations and chambers of commerce, which in turn means they treat each other as competition rather than unifying under a ‘government tourism’ brand.

“This competition dilutes their marketing efforts, rendering them ineffective at competing against a large middleman such as Expedia or Travelocity.”

The WHMA signed on with the company in September, and will be paying an annual rate below the $20,000 to $30,000 that would normally be charged for a similar organization because the WHMA will work to advocate for BookDirect in the area.

BookDirect will offer a free reservation engine for those hotels that don’t have one available, so no properties will be left out, Scruggs said.

Right now, the WHMA isn’t booking tickets online through BookDirect, but the company does have a ticket module, according to Caldwell, that the WHMA could use in the future.