GetYourGuide now collects commission for supplier cancelled bookings

This week GetYourGuide, recently flush from raising VC funding to the tune of 75 million USD (total now 170 million USD), surprised their suppliers by tweaking how supplier initiated booking cancellations are handled.

What did GetYourGuide change?

Excerpt from a general email sent by GetYourGuide to all suppliers…

As a customer obsessed company, we are committed to always keep the promise to our customers by giving them what they booked. In order to share this commitment to the customer with you, from November 1st GetYourGuide will charge the commission for bookings cancelled by the supplier (excluding force majeure reasons), as mentioned in point 10.3 of the Supplier Terms & Conditions. Please remember that in order to cancel a booking, suppliers must contact our Customer Service team and provide the reason of the cancellation. The charge can be avoided if an alternative option is offered to, and also accepted by, the customer.

What GetYourGuide has done is change the supplier conditions so that if the supplier cancels the booking, GetYourGuide will still charge the commission.

If a supplier is cancelling because of weather or e.g. political unrest closing a road, the supplier can cancel without losing associated commission.

Timing & industry context

The timing, alongside the funding announcement, was unfortunate. I have seen supplier emails calling GetYourGuide “desperate for revenue” and not having any understanding how tour suppliers work.

However, is this really fair of suppliers to react that way? I think not.

Supplier initiated cancellations are a massive problem – for the customer and for the online travel agent – and it is great that an industry leader such as GetYourGuide is tackling it.

We are all as an industry enabling more spontaneous booking behaviour (i.e. booking with hours to go, not weeks before) as this is what the customers are demanding. If the customer has received a confirmed booking from the supplier, it is really bad customer experience for that booking not to be delivered. Other planning could have taken place and other tours booked around that one experience will be disrupted. We must avoid this.

Solo backpackers are the group normally worst hit, so much so that I once considered setting up a tour & activity travel agency focussed on solo backpackers that would only list tours guaranteed to be running even for a one person booking – i.e. either those with a minimum number of one, or those tours that had already attained minimum numbers. Perhaps I should bring that idea back again? 😉

Why retain commission?

The alternative, ranking that tour provider lower, would potentially impact booking numbers to that tour provider which hurts GetYourGuide also… The commission stick is a supplier side only penalty.

Why do suppliers cancel?

There are two kinds of tour company – those with small number of tours, each selling at high volume and there are those that list many different tour itineraries but only run a handful on a daily basis.

This second style where you advertise many options is popular in lower volume destinations as you can cast a big fishing net and you will surely catch some fish. It’s this second style that has the supplier initiated cancellation issues. Often tours have a minimum number such as 4 people and below that number any bookings will be cancelled at the last minute.

Tech challenges with distribution

GetYourGuide are right in their overall approach however this creates an argument that technology delivered bookings need to be able to handle unconfirmed bookings i.e. requests. Sometimes a local tour operator has to check availability of a sub-component and that has to be done manually. If the customer knows the booking is not yet fully confirmed, they can plan accordingly.

Many online travel agents have this on request capability but they have not implemented it within the popular distribution APIs.

No one really wants to extend distribution APIs to handle “on request” bookings. For reservation systems that don’t have a non-confirmed booking state, introducing it now would add real complexity (to the user interface, to the reporting e.g. do you count a non-confirmed customer against the booking numbers etc) so best avoided if possible.

Supplier tech solutions

One simple solution is to adjust the minimum booking size that you accept depending upon existing bookings on the tour and the length of time before the travel date.

e.g. take a tour that has a minimum number of 4 people. A supplier would accept a 2 person booking at 5 weeks to go, even if no other bookings yet. However they would not accept a 2 person booking at 24 hours to go, unless there were already people on that booking… BUT they would accept a 4 person booking.

While this doesn’t completely fix the problem, it does lessen the chance of it happening, as you won’t accept bookings at the last minute that are not going to run.

This solution does require the minimum booking number to be communicated to OTAs along with any availability number… Again something that not every online travel agent currently can handle (this number is often set on OTAs at tour/experience level, rather than a date/instance level).

A compromise?

Perhaps the way forward is that the suppliers should not be charged the booking commission (partially or fully) when a supplier instigated cancellation happens within 24 hours of the initial booking creation date. This handles the situation where weeks before travel a customer books, the supplier realises the next day there has been a mis-configuration or on manually checking some critical component finds it is not available and immediately (in their next available office hours) cancels the booking with the online travel agent.

What we are trying to avoid is the confirmed booking happening weeks before and then being cancelled at 24 hours before the tour date start due to lack of customer numbers… This compromise keeps the penalty applied to that scenario.

Other ideas?

Any other solutions tech or commercial? Good to debate it now as if GetYourGuide makes this concept stick, the other online travel agents will likely adopt it soon too… So suppliers, comment now! (below)