Rental booking system or Hotel Reservation System – Which Business you should Aim for and Why?

So, what is the basic difference in functionalities between the rental booking systems and the hotel reservation systems?

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1) Introduction

An online rental booking system is an online system that connects the hosts who want to rent accommodations – entire homes, private rooms, shared rooms, Tree houses, Townhouses, condominium, or castles to the travelers.

The main Stakeholders of such a system are the Hosts (Who list out accommodations), local hosts (who create experiences), Photographers, Restaurateurs, Guests.

The service providers in the online rental booking portal are the local people who want to make extra income by renting out their space at affordable prices to the travelers. Such portals mainly strive to provide a home-like feeling to the travelers with the accommodations.

Among all the other vacation rental platforms available online, Airbnb aces the business chart.

Hotel Reservation System:

The Hotel reservation systems are the portals that have got hotels listed from a wide range of hotels for the travelers to make bookings.

The main Stakeholders of such online hotel reservation portals are the Hoteliers, Flight companies, Car Renting companies, Holiday Activity organizers, travelers.

The service providers with online hotel reservation systems are the hotel brands and chains of hotels whose main business is to make money by charging the travelers for their stay at a cost. Such portals mainly strive to provide a rich experience to the travelers with their hotel rooms.

Amongst all the other hotel reservation platforms available online, Expedia tops the business chart.

2) Revenue Model Possibilities:

The revenue generation possibilities help gauge the economical potential of the room/accommodation booking portal.

The commission model of online rental booking system can be considered analogous to that of the Airbnb.

The commission model consists of two types charges:

Airbnb charges the host a service fee every time a booking is made by the travelers using the portal. The amount of this service fee of the host is basically 3% and can exceed from 3% to 5% percent depending on the cancellation policy chosen by the host.

The host service fee is calculated from the booking subtotal that is before the fees and taxes and is automatically deducted from the payout to the Host.

Airbnb charges the guest a service fee after they confirm a reservation, somewhere between 5% to 15% of the reservation subtotal. This depends on a variety of factors such as the size of the reservation and the type of the listing.

The rental booking system can choose to charge the listing fees from the hosts for every accommodation they list for the platform. This charge solely depends on the size of the accommodation to be listed, the number of guests it can accommodate, the location of the accommodation, and the type of the accommodation.

For the listings that want to be specially listed on the first page of the rental booking system, it charges the hosts with the featured listing of the accommodation.

The online rental booking portal can choose to rent out their website and/or app space for posting the advertisements to the relates services and earn using PPC model.

Also Read:  Exploration On How Should You Plan Your Business Strategy For Vacation Rental Booking App

Hotel Reservation System:

In the case of hotel reservation systems, the portal charge the hoteliers a service fee every time a booking is made by the travelers using the portal.

The host service fee is calculated from the booking subtotal that is before the fees and taxes and is automatically deducted from the payout to the Host.

The hotel reservation system platform charges the travelers a transaction fee of the reservation subtotal, after they confirm a reservation. This depends on a variety of factors such as the size of the reservation and the type of the room booked.

In many cases, hotel management software is distributed by the hotel booking portal to the hotel for the better handling of the space and rooms.

The hotel reservation system portals can choose to rent out their website and/ or app space for posting the advertisements to the relates services and earn using PPC model.

3) Cancellation Policies:

In the vacation rental system, the cancellation policies are formed in general terms and embracing all the but-and-if situations that might arise in the cancellation. The hosts can decide the amount of the cancellation fee, but the duration, including the terms and conditions totally depends on the vacation rental system.

Carefully have a look at the cancellation policies of Airbnb:

Airbnb allows the hosts to choose among three standardized cancellation policies – Flexible, Moderate, and Strict to ensure the protection of both the guests and the hosts.

As per the cancellation policies selected by the hosts, the guests who initiate the cancellation process are refunded back their deposits.

In Flexible Cancellation Policy, full deposit is refunded within a limited period of time.

In Moderate Cancellation Policy, full deposit is refunded within a limited period of time.

In Strict Cancellation Policy, 50% of the deposit is refunded back until 1 week prior to check in.

Apart from this, there are another two Super Strict 30 Days and Super Strict 60 Days cancellation policies which apply to special circumstances and are by invitations only.

In Super Strict 30 Days Cancellation Policy, 50% of the deposit is refunded back until 30 days prior to check in.

In Super Strict 90 Days Cancellation Policy, 50% of the deposit is refunded back until 60 days prior to check in.

There is a Long Term cancellation policy that applies to all the reservations of 28 nights or more.

Considering the long term booking of the accommodation, in this cancellation policy, the first month is non-refundable and a 30 day notice is to be given before cancellation.

It is imperative for the hosts to clearly display the cancellation policy of each listing and reservation on the vacation rental portal for the guests to cancel and review any fee by viewing the travel plans and then clicking ‘Cancel’ on the appropriate listings and reservations.

Hotel Reservation System:

Cancellation policy of the individual hotel:

For the cancellation policies defined individually by the hoteliers, the custom inventory method is used. Herein, the portal admin gathers the cancellation policy of all the hotels listed under the portal and cancellation charges is applied respectively.

Cancellation policy of the Hotel Reservation System:

For the cancellation policies defined dominantly by the portal, the data of every hotel are extracted from the global distribution system and in most cases, the portal itself lays out its generalized cancellation policy that the travelers and the hoteliers have to abide by.

4) Scope of Comprehensiveness:

The scope of comprehensiveness implies to what extra service the travel and hospitality portal can offer other than providing a place to dwell.

In case of the rental booking system, the portal gets to control what the travelers do when they travel. This calls for a number of activities that the travelers can choose to make bookings for.

Here the local hosts can create their personalized experiences and post on the platform. The admin reviews the ‘to-do activity’ and decides whether he wants to allow the listing of the experience on the platform or not.

Since it is a home, a villa, or a condominium for the vacation rental booking platforms, it does not provide any meal and here is where restaurant service can be added to the rental booking system.

Similar to the functioning of OpenTable, the rental booking platforms can list out various restaurants within itself and earn through the commission model.

The restaurateurs requests for the listing of their restaurant and when the request is accepted, the restaurateurs also start getting the reservations from the guests of the portal.

Be it boat rental, bicycle rental, car rental, or any other equipment, the rental portal can evolve in itself by convincing the hosts to rent out their equipment and make money.

Hotel Reservation System:

The hotel reservation platforms can collaborate with the flight and travel booking platforms and can create a database that provides the easiest way to the travelers to make the complete package booking from one portal and avail offers.

The holiday activities for the platform are the sights worth seeing and the centralized activities that are managed by an already established firm.

The hotel reservation portals can conjoin with the car rental companies and allow the travelers to make bookings for the renting out a car from the portal when they are on holidays.

The Verdict:

Hotel Reservation System Over Online Rental Booking System:

1) While the hotel reservation system offer assured quality services since the hoteliers are trained hosts and big brands at the serving end.

2) The hotel reservation systems are easy to manage when compared to the online rental booking system, since not many stakeholders are involved and the ones involved are companies who solve the issues within.

3) The hotel reservation systems are easy to expand since there are chain of hotels across countries and continents.

Threats:

1) The users can choose to make booking for the hotel room from the hotel website itself. Many hotels and airlines have started offering deals so that the travelers can book with them directly and these pose a threat to the operations of hotel reservation systems.

2) The online hotel reservation system does not have any safety measures for the travelers in terms of insurance.

3) The service is only available in bigger cities, since the hotels listed are only available in urban areas.

Rental Booking System Over Hotel Reservation Systems:

1) The online rental booking portal is available at an affordable prices to the travelers and so are favored by the users.

2) The rental booking systems can accommodate large number of audience in the form of stakeholders hosts for homes, photographers, experiences, restaurants, guests, etc. Thus, customer acquisition happens faster.

3) Since the stakeholders are the local people and the travelers, it provides insurance to the guests as well and the hosts.

4) The vacation rental service can be available in any place – urban or rural. There are instances of having listed igloos and tree houses on Airbnb.

Threats:

1) The reputation of vacation rental platform is always dependent on the service of the hosts, and if the hosts happen to do anything wrong, the brand image of the vacation rental platform is affected. The hosts are not well-trained in hospitality.

2) The business is vulnerable to illegal listings done by the hosts on the website which can turmoil the company’s brand image.

Which business you should aim for up-frontally depends on how well are you in dealing with the threats that come in the way to take your business steps ahead of its fierce contenders.

Both of them have their own peculiar specks and unique spots.

But I personally feel, the online rental booking portal is still unique and come at an affordable tag for the customers. Moreover, they accommodate a good number of people and the instances of ‘word of mouth’ marketing are too strong in this portal.

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Vishal Nakum

Vishal Nakum is a tech enthusiast with a passion for exploring the latest developments in the world of technology. He has a keen interest in emerging technologies such as Artificial Intelligence, Machine Learning, and Blockchain, and enjoys keeping up-to-date with the latest trends and advancements in these fields. Vishal is an avid learner and is always on the lookout for new ways to expand his knowledge and skills. He is also a creative thinker and enjoys experimenting with new ideas and concepts. In his free time, Vishal enjoys playing video games and reading books on technology and science.