A Cautionary Tale for Hoteliers: Pay Attention to the Terms and Conditions of an Acquired Service Provider
Leading booking site Trivago is making waves in the hospitality industry with the news of its majority ownership stake in Base7booking, a cloud-based property management system.
As highlighted in this recent Skift article, this move means Trivago can get deep into the business-to-business side of the hotel business – allowing hotel brands to manage daily operations, run reports, send invoices and enhance their digital and email marketing.
On the surface, this seems like a very viable strategy for Trivago. However, for hoteliers who are already using Base7booking as their Property Management System (PMS), what happens when Trivago gets access to guest booking data? Since Trivago is an Online Travel Agency (OTA), will they use this data to divert direct bookings from hotel brands?
This certainly remains to be seen, but it should be a cautionary tale for all major hospitality providers. The lesson being that everyone should fully know the contractual terms and conditions of a technology provider in the event that a potential competitor acquires them.
Of course, it is not clear if this will actually happen with this particular acquisition. But when looking at other industries, this is a common phenomenon. For example, in the healthcare arena, you often see device manufacturers acquiring billing platforms, which will go directly to the consumers (cutting out the distribution channel).
Investors and the public markets need to see year-over-year growth and a return-on-their-investment, drivers for companies like Trivago expanding its footprint.
While this type of business expansion is understandable, it can put a hotelier in a risky position, which is why knowing all of the contractual terms and conditions with your partners is vital.