Comment by zackmorris | Hacker News Reader

Comment by zackmorris | Hacker News Reader

This looks like a good opportunity to discuss something I'm concerned about regarding booking apps. We used Expedia I believe to book a hotel last year and I remember that it charged a $20 fee on top of an $80 hotel room. I believe they had an agreement where the online and in-person price was the same, so the hotel basically ate that $20.

So it's good for them to get the constant business (similarly to how Groupon works) but I can't help but feel that more of that $20 should have gone to the hotel staff, especially maids doing the actual work of cleaning up after everyone.

To me, running a bunch of web services to book rooms could be done on a properly configured computer taking 10,000 reservations a second for ~$10 per month. So the cost for booking apps has got to be mostly logistical (getting hotels onboarded with the organization, paying for liabilities, etc).

My question is, will competition in these spaces ever lower the fees and free up more money for labor? Or are we entering an endgame where labor gets relegated to the shadows?

Whenever I see comments along the lines of "In my mind you could replace this 20,000 person company with a computer running a script for $10 months", I'm convinced that folks don't know what really goes in to running a large e-commerce site.

To be sure, I'm not arguing there isn't a lot of waste at these large companies, but running a large eCommerce business at scale is a hugely complicated endeavor. For one, the economics of large OTAs mean that very small increases in conversion rates can result in huge increases in revenue, so they all have very large teams optimizing their sites, running a ton of A/B tests, optimizing their search advertising bidding, etc.

Yes, it definitely would be possible to build a fairly straightforward hotel booking site with a very small number of people. To do it in a way that makes any money is a much more difficult problem.

When the hotel participates with an OTA like Expedia or others, they are not paying for the facilitation of the booking, they are paying for the demand that Expedia has generated for the hotel. An unsold room is perishable every night and the cost of not participating on Expedia is that the room is empty instead of being filled at a $20 lower profit margin.

It will not. The labor is commoditized - if you want more money to go to the staff, you need to directly hand it to them in the form of cash.

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