Positive Summary
Providing operators with a direct booking platform.
Not So Positive Summary
No inventory. No real benefit to customers. Insufficient fee-free period for operators. Product needs more refining. Poor search functionality. Lacking vibrant, youthful aesthetics.
After the much-anticipated re-launch (16th February) of hostelrocket.com, I was surprised, to say the least. Prior to the relaunch, I had thought this model was promising and generally heading in the right direction; however, now I think it has taken a few steps backward, and this is why.
Minimal Value Proposition
They have moved away from three of the golden rules of OTAs' “possible” success, those being:1. Provide customers with more inventory than your competitors.2. Provide customers with lower than price parity rates or perceived better value.3. Avoid entering PPC bidding wars with large, established OTAs.
Avoidance of these issues raises questions about the value for both their users and their customers.
It's Expensive for Most
It seems they now only list properties that have paid the $200 a month listing fee (90-day fee-free period) to receive direct bookings, which is fair and understandable from hostelrocket.com’s perspective. This could be manageable for operators who are getting familiar with flat fee services such as channel managers; however, this reduces inventory down to virtually nothing for customers. For example, when I searched for a hostel in Sydney, the closest listed property was in Brisbane (1,000 km away). This is very disappointing for the obvious reason: you are giving the customer no options, especially for a backpacking mecca and gateway city like Sydney. This also diminishes their retention, as they have no reason to return to your service, making it previously rendered pointless.
I would be concerned about seeing any type of ROI for those early-adopting operators that took the gamble and listed. I am a big supporter of new disruptive technologies, but this feels like the same old model with a little makeup, and I fear hostelrocket.com will have no other option than to fall into a bidding war to attract customers, which they are destined to lose without deep pockets.
Their Marketing Angle is Obtuse
OTAs aren’t the competition; Google is (and trust me, I love Google). They don’t make $70 billion a year in ad revenues by businesses acquiring customers free of charge, so the only way to beat the biggest established OTAs is to remove Google from the equation. In my opinion, hostelrocket.com does not yet have a practical solution that avoids the Google machine for acquiring customers, which doesn’t mean they won’t get bookings; it just means they won’t get many. This doesn't even take into account the other paid search options out there.
I know what hostelrocket.com would say: “We have unique social marketing techniques” (yeah, yeah, heard that one before) and “We offer operators direct bookings,” completely neglecting the fact that customers aren’t interested in what the breakup of the total bed rate is or who gets what commission; they care about finding the most cost-effective booking. Indeed, they are putting forth massive efforts on their social media and content marketing, doing exceptionally well on the engaging side. They really get people to respond and open up, especially on Twitter and Instagram.
The financial return of these efforts is almost impossible to measure in the short term and difficult to measure in the long run. Do these countless hours spent building content and engaging these potential customers lead to any bookings, especially now when the inventory is limited? There comes a point when the return will have to be measured, and perhaps they should put resources toward adding inventory instead.
Basically, hostelrocket.com does not currently have enough inventory and doesn’t offer customers any discounts or perceived better value, so why would customers use their service, let alone return? You have sites like hostelzoo.com with 100 times more inventory and price comparisons offering a perceived discount, and even they still struggle to attract customers because their platform only resells other OTAs. Just to be clear, I really thought hostelrocket.com was on the right track and still hope they can refine their model to make it more attractive to both operators and customers, and I believe this can be done.
As I have said before, the current OTA model has a shelf life; when that ends is left in the hands of those who create new disruptive technologies that find the right balance between customers and operators.
Important: Please note the author of this article does not currently or has previously worked directly or indirectly for the companies listed above or for their competitors.