Online Hotel Booking Industry in India had already become a red ocean when Mr. Inder Sharma thought about entering the industry. Two models were dominating the Online Hotel Booking sectors. Online Travel Agents (OTAs) such as MakeMyTrip.com, Cleartrip.com, Goibibo.com, Yatra.com etc. and the Accommodation start-ups such as Oyo Rooms, Treebo, FabHotels etc. had already captured almost 19% of the total hotel booking industry (which stood at $7.2 Bn at that time). Before going further on how Mr. Sharma went ahead, let me explain how OTAs were different from Accommodation Start-ups.
Accommodation Start-ups such as Oyo Rooms are actually Re-Seller unoccupied Hotel rooms. Suppose a hotel with twenty rooms has an average 50% occupancy. Oyo would approach the hotel and will book a few (say 2 or 3 rooms) of those 10 unoccupied rooms at a 50-60% discount for quite a long period (ranging from 1 month to 1 year typically). Then they co-brand the hotel room as Oyo Room with a number (like Oyo Room 041, Oyo Premium 701 etc.). After rebranding the Hotel with their own name they re-sell the hotel at a name determined by name. They do not use Amadeus (or any of such kind) platform for hotel booking rates.
On the other hand, OTAs operate totally differently. They work on commission basis. They charge a commission on the rate at which Hotels are booked. All of them use Amadeus platform. Amadeus through its complex algorithm fixes a rate for a hotel based on demand and supply. Sometimes the OTAs themselves pay from their own pockets to give the customer some extra discount.
HotelBids.com did something which was till then not there in India. Priceline.com’s patent on reverse bidding had just got expired. So they built a hotel booking site using the reverse bidding process.
Customer needs to open the Hotelbids site or app, select a city, date, type of room and the price they want to pay. Customer’s work is done.
Requests go to various hotels and users may receive multiple acceptances from hotels. They can now pick the hotel according to their personal preferences.
According to Mr. Sharma, around 30 percent of inventory goes unoccupied in hotel industry. Through HotelBids.com, he is offering freedom to hoteliers to rent out inventory at the last minute. There is no pre-booking of inventory by Hotelbids. Here, hoteliers are the ultimate decision-makers.
The most interesting fact is that Accommodation Start-ups like Oyo Rooms, Treebo etc. have also started partnering HotelBids to sell their unoccupied rooms at the last minute.
As of now it seems that HotelBids.com is here to stay!