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

Introduction

First of all, Many Congratulations to You as you have decided to enter the ever-evolving and profit-bearing hospitality industry.

Yes, indeed it’s a bold decision because serving today’s tech-savvy travelers and facility-demanding tourists isn’t a cakewalk.

Maybe you have decided on the property location and your initial investment budget is also ready.

Also, regardless of the fact whether or not you have prior experience in catering to the hospitality sector, you have to take some important calls like exploring the variable options of the hospitality business.

Can you guess what we are talking about? Yes, our topic for this article is conducting a detailed and thorough comparison between the rental booking system and the hotel reservation system.

Ah, don’t get confused. We are probably pointing at the two most popular accommodation options searched, explored, and chosen by travelers and tourists today.

We have all heard about the hotel reservation system, which allows travelers to book their preferred hotels from the scheduled lists based on their requirements and budget estimates.

The hotel reservation system held its long-time monopoly in the hospitality market, until the arrival of key players like Airbnb in 2007 and Vrbo in 1995 which introduced the concept of rental booking for travelers and tourists.

That is how the rental booking system was born and gradually became exceedingly popular.

So before you take a final call to start your hotel business or attach your property with Airbnb, read this comparison guide that will help you clearly understand which of these is a more profitable and better revenue-generating venture in the long run.

So, let’s commence with small definitions of these two popular accommodation option types. 

Rental Booking System And Its Core Features

A rental booking system is a digital platform that allows travelers and tourists to book rental properties, such as vacation homes, apartments, private rooms, condominiums, tree houses, and more.

Rental properties are charged based on per day, weekly, or monthly. Users can quickly and easily search, book, and manage such properties from anywhere.

These systems typically offer features like property listings, availability calendars, secure payment processing, and communication tools between renters and property owners.

Key Features of the Rental Booking System 

• Availability Calendar: Clear display of dates when properties are available for booking.
• Secure Payment Processing: Reliable payment gateway for seamless transactions.
• Communication Tools: Messaging platform for renters and property owners to discuss details.
• Booking Management: Easy booking process with options for modification or cancellation.
• Reviews and Ratings: Feedback system to help renters make informed decisions.
• Multilingual Support: Ability to cater to users from diverse linguistic backgrounds.
• Automated Notifications: Reminders for upcoming bookings, payments, and check-in/check-out procedures.
• Integration Options: Compatibility with third-party tools such as property management software or listing platforms.
• Reporting and Analytics: Insights into booking trends, occupancy rates, and revenue generation for property owners.

Hotel Reservation System and its Core Features

The Hotel reservation systems are the digital portals that provide a list of hotels to users to make bookings.

The main stakeholders of the hotel reservation system are hoteliers, flight companies, car renting companies, holiday activity organizers, and travelers.

The tool enables hotels to manage their room inventory, bookings, and guest information efficiently. It allows guests to search for available rooms, make reservations, and pay for their stays online.

The system typically includes features such as room availability calendars, online booking portals, secure payment processing, guest profiles, and reporting tools. These features improve the guest booking experience.

The key players in this group are Expedia and Booking.com. 

Key Features of Hotel Reservation System

• Room Inventory Management: Detailed tracking of available rooms, types, and rates.
• Online Booking Portal: User-friendly interface for guests to browse and book rooms.
• Secure Payment Processing: Integration with trusted payment gateways for secure transactions.
• Reservation Management: Tools to modify, cancel, or confirm reservations as needed.
• Guest Profiles: Storage of guest information for personalized service and future bookings.
• Room Allocation: Automated assignment of rooms based on guest preferences and availability.
• Reporting and Analytics: Insights into occupancy rates, revenue, and booking trends for informed decision-making.
• Integration Capabilities: Compatibility with other hotel management software for seamless operations.
• Multi-channel Distribution: Ability to list rooms on various booking platforms for increased visibility.
• Loyalty Programs: Implementation of rewards and discounts to incentivize repeat bookings and guest retention.

Comparison Based on the Revenue Model

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

Revenue Model of Rental Booking System

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

The commission model consists of two types of 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 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 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 its website and/or app space for posting advertisements to the related services and earning using the PPC model.

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

Revenue Model of Hotel Reservation System

In the case of hotel reservation systems, the portal charges 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 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 advertisements to the related services and earn using the PPC model.

Comparison Based on Cancellation Policies

In the vacation rental system, the cancellation policies are formed in general terms and embrace 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, depends on the vacation rental system.

Cancellation Policy of Rental Booking Software 

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 their deposits.

• Flexible: Full refund for cancellations made at least 24 hours before check-in time.
• Moderate: Full refund for cancellations made at least 5 days before check-in time.
• Strict: 50% refund for cancellations made at least 7 days before check-in time.
• Super Strict 30 Days: 50% refund for cancellations made at least 30 days before check-in time.
• Super Strict 60 Days: 50% refund for cancellations made at least 60 days before check-in time.
• Super Strict 90 Days: 50% of the deposit is refunded back until 60 days before check-in.
• Long Term: Special cancellation policy for reservations longer than 28 nights, with varying refund terms.

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.

Cancellation Policy of 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 are 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.

Comparison Based on the Scope of Comprehensiveness

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

For Rental Booking System

In the case of the rental booking system, the portal gets to control what the travelers do when they travel. This calls for several 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 meals, 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 themselves and earn through the commission model.

The restaurateurs request 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.

For 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 for 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 travelers to make bookings for renting out a car from the portal when they are on holiday.

Our Final Verdict: What Should You Choose for Business

Where Hotel Reservation System Excels Over Online Rental Booking System

1. The hotel reservation system offers 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 that solve the issues within.
3. The hotel reservation systems are easy to expand since there are chains of hotels across countries and continents.
4. A popular UK-based consumer research group conducted a survey in which they found that hotels are 75% less expensive than rental platforms like Airbnb. 

Threats

1. The users can choose to make a booking for the hotel room from the hotel website itself. Many hotels and airlines have started offering deals so that 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 travelers in terms of insurance.
3. The service is only available in bigger cities since the hotels listed are only available in urban areas.

Where Rental Booking System Overpowers Hotel Reservation Systems

1. The online rental booking portal is available at affordable prices to travelers and so is favored by the users.
2. The rental booking systems can accommodate a large audience in the form of stakeholder 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 as 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 a 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 peculiar specks and unique spots.

But we feel, the online rental booking portal is still unique and comes 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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