How hotel booking sites like Oyorooms, Zo rooms, Stayzilla make money?

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How do hotel booking aggregate site make money? There are a lot of them working like this, across the world. Here is the guide on how they (and possibly you too) make money. You can even start a website like theirs’ with the tools  explained here.

How do I know this?

I was also fascinated by this business model and went on with starting a site like oyorooms. However I had to leave the idea as I got more engaged with flying. I talked with many hotel owners, took photos of rooms, collec

Hotel aggregates usually brand and advertise themselves as if they own all hotels in the chain. But they dont even have a single room of their own. What are the common features of such sites?

  1. They usually dont have even a single room or hotel
  2. They advertise as if they own all hotels in their chain while each hotel they have may have tie-up with other networks too
  3. They dont publish the name of hotels in the chain. (Name and address is revealed to the customer after booking only)
  4. The partner hotels may have tariff rates higher than that given by the websites

Usually, tariff of the hotels in the chain will be much higher than that advertised in the websites. Then how can the booking site make money make money even after offering cheap prices? Booking sites make a deal with the hotels involved. As per the deal, they will be providing bookings regularly to the hotel and the hotel should give cheaper than normal prices to them. For example, if the hotel room costs 1500 Rs per day, Oyorooms can get it for 900 or 800 Rs. Then they sell it for 1100 Rs. The margin here is the profit.

Detailed analysis of profit and expenses.

Suppose today is 1-January 2017. A hotel room costing 1500 Rs is getting booked for 2 days from 20th January. So, the site will be paid 3000 Rs by the user, for 2 days. The site should pay 900+900=1800 to the hotel as per their agreement. Also, the site will spend another 50 Rs for soap and cosmetics which are given to the user as a free gift. Site should send some SMS messages to user regarding the booking status and route. It will cost another 10 Rs. For booking online, the site has to pay for payment Gateway. Deduct another 20 Rs for payment gateway charges. Hotel will be paid 1st of every month. So, they have to pay the hotel of 1st February 2017. Till then, the money paid by the user will stay in the account of booking site. They get interest of that money too.

So, 3000 – (1800+20+50+10) =1120 Rs + interest for 1 month will be the profit.

In the real sense, the booking site should have to pay a little on taxes, advertising and management. Anyhow, they will receive a decent commission of more than 30% through their deal.

Is this a nice idea to start with? If your answer is yes, Read this article on starting a hotel & travel booking site like make my trip, oyorooms, goibibo, ixigo etc..

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