Since June 24th, the online accommodation portal Booking.com hasn’t transferred the due amounts to accommodation providers internationally, citing maintenance of its billing system. The deadline set by the company for itself, which has been modified several times in the meantime, expired on July 24th, but the hosts still haven’t received the money of the bookings. Meanwhile, payments are made without any issues for hotels using the virtual card payment solution. Update: Booking’s system now promises reconciliation only for September.
Booking.com is late with payments, accommodation providers are waiting for their money
Online forums and accommodation provider groups are increasingly filled with questions, and not surprisingly, suspicious rumors are also spreading, many are already envisioning Booking’s bankruptcy and fear they will never receive their money. It’s worth noting that the collapse of Hungarian Bónusz Brigád started with similar symptoms, but the market situation looks very different now, making this scenario unlikely. Numerous accommodation providers are already posting comments (encouraging their colleagues to take similar steps) suggesting they cancel existing bookings with their future guests and ask them to book and pay privately, waiting for their refund from Booking. This is unfortunate for everyone and is not recommended at the moment.
What is known about Booking not paying several accommodation providers?
First, it’s important to clarify that partners can choose from several payment solutions. Currently, those affected are the ones who entrusted Booking to collect the money from guests through online payment, meaning the payment doesn’t happen at the accommodation.
Some collect payment from the guest upon arrival and later pay the commission to Booking against an invoice. Hotels use a so-called virtual card payment solution. The problem affects those who handle the entire payment through Booking and by transfer.
Payments for bookings checked out between June 28 and July 19 will be made by July 24, 2023, with a combined payment. The usual payment schedule is expected to resume by July 27, 2023.– Booking informed its affected partners through its own platform.
Booking.com claims that in mid-June, they alerted all partners that they were making updates and improvements to their financial electronic system between July 1 and 11. As a result, if guests checked out of the accommodation after June 28, Booking.com did not pay out the amount of their booking in the usual schedule but collected these funds and, according to their promise, should have paid them to the accommodations in one lump sum on July 24.
After that, everything is expected to return to the usual schedule from July 27, 2023. This means that after July 27, hosts should receive payments for each checkout separately, as they usually do, not in one large sum.
Where is the money?
ask the accommodation providers, as for most of them, without any communication, the payment date of the 24th is extended to July 27, and since then, this date has shifted to August 4 for many. Some even have a payment indicated for July 21 in the system, but they still haven’t received any money.
Currently, everyone I consulted on the topic unanimously claims that they haven’t seen a single penny since June, and it’s high time.
Booking.com doesn’t pay during the peak season – what do accommodation provider partners think?
Calling the system maintenance a “nuisance” is quite generous, as accommodation entrepreneurs and businesses incur numerous expenses along the way, especially now, in the midst of the summer holiday peak season.
“Booking owes us nearly 1 million forints. The situation is unsettling because, unfortunately, they don’t communicate. Despite calling them, they refuse to provide any specifics. I don’t know what to expect and how long we need to pre-finance operations.”– said the owner of Villa Toscana in Hajdúszoboszló.
Based on the analysis of hospitality complaints submitted from all over the world on Booking.com’s Partner Hub, the primary issue is that Booking.com decided to conduct maintenance on its financial system during the main business period. This decision – especially for small businesses, as well as those taking risks with mortgaged or rented properties – causes significant financial difficulties, as before they see a penny of revenue, they already have to pay out for the following items:
- Contribution to tourism
- Utility bills
- Property management fee (for those who have it)
- Gardener’s fee
- Laundry fee
- Replacement of consumables
- Amenity costs
- Employee wages
- Loan taken out for the property
- Rent in case of rented properties
There has been no indication of payment issues from hotels.
The explanation for this is that larger market players deduct money through a so-called virtual card upon guest arrival. Payments continue smoothly through this method. This is good news for those who are worried, as the delay is likely due to IT issues rather than financial ones.
Bookings with hotels are made through Booking.com. The guest arrives at the hotel, pays for the accommodation, and the hotel subsequently pays a commission to Booking. In this setup, the hotel’s money cannot get stuck with the intermediary.
Payments through virtual cards work. Hotels can deduct money from it upon guest check-in, as if it were the guest’s private bank card. Booking provides a virtual credit card number, and hotels charge this. This system currently operates without any hitches.
The hotel has a contract with Booking through the central Radisson chain, which operates differently than private accommodations.
Neither of the two aforementioned payment methods experienced any issues at the Zalakaros Park Inn hotel.– stated Tibor Horváth, the hotel director of Park Inn Zalakaros.
Bence Vincze, a manager of a Budapest hotel, also commented:
“We exclusively use the virtual card payment solution, and we haven’t experienced any issues in this regard. However, we see the problem with private accommodations. In our case, 70-80% of bookings come from Booking, which would significantly impact us during our almost fully booked season if these were to drop out or payments weren’t made.”
Booking.com does not meaningfully communicate with its accommodation partners.
Understandably, tensions are heightened as hosts feel they are not getting answers, there’s no substantial communication, nor support from Booking’s customer service. They have inundated the Dutch company’s customer service with questions, but only template responses are received, such as the one below. It states that there may be delays in payments in both July AND August, and then they kindly point out that the indicated dates are only guidelines and are not guaranteed.
The frustration and uncertainty of the hosts are further exacerbated by the fact that Booking has started to modify its own set and extended date of July 27th. Many accommodation providers saw an August 4th date appear in their system, with the caveat that it might take an additional 10 days from that date for the money to arrive in their bank accounts due to bank transaction processing times. Even for international transfers, this 10-day period seems like a steep deflection on Booking’s part in the era of instant transfers.
As if all this wasn’t enough, the following message appeared on the admin interface on the afternoon of July 25th:
The lack of substantive information from customer service further amplifies the frustration of the hosts, who are now being directed to file complaints. It’s worth filing a complaint because, in the event of a future dispute affecting a private contract, the first step is the existence of a complaint, after which one can turn to a conciliation board. Complaints can be made after opening the dispute resolution platform and providing personal data. One must select the topic and describe the complaint in as much detail as possible.
Regardless of the above, legally, Booking is currently operating correctly. The real trouble will become more evident if, by August 14 (considering the August 4 + 10 days), the accumulated money does not arrive in the hosts’ accounts. At this point, I’d like to emphasize that the first transfer is likely not to include the total debt, but only the amounts due after bookings checked out between June 28 and July 19, as these were planned to be settled on July 24 with a combined payment. So, it will be worth doing some calculations and reasoning when the first transfer arrives!
How likely is Booking.com’s bankruptcy? Is IT really this complicated?
In Spabook’s opinion, the likelihood of Booking’s bankruptcy is extremely low, but not impossible. The expectation is reinforced by the fact that although insider trading is punishable by law worldwide, in the case of significant news, stock prices start to move either up or down before the news appears, depending on whether the news is negative or positive. Booking’s stock price on the US stock exchange is on an upward trend; on July 25, it performed particularly strong, up by 1.7% at the time of the article’s publication. This in no way suggests that the company is in trouble; on the contrary, it indicates that they are in a good financial position.
For such massive companies, very robust IT systems operate in the background. Many system elements might have been in use for over 10 years because any change would have involved excessive risk, downtime, or resources. They use these “fossils” as long as they don’t jeopardize safe business operations. However, when a point comes, either for technical or business strategy reasons, where significant development or system integration is needed – perhaps because they enter a partnership with another company – it often demands a massive amount of work. We are likely witnessing this now.
In Hungary, Takarékbank, now known as MBH, was unable to solve the issue of querying my credit card balance and transactions online for over 2 years. They couldn’t even display the debt; instead, they sent it by mail via post with a yellow check and via SMS.
Based on current information, IT colleagues are likely sweating blood instead of enjoying summer sunbathing, which in turn is making the hosts sweat, especially those with low financial liquidity and no reserves.
In conclusion, I note that this operation would certainly warrant an investigation by the GVH (Hungarian Competition Authority). A substantial fine is absolutely due, as failing everyone as the leading player in the market is a significant irresponsibility.
Update: The GVH has taken action on the matter.
Update: Booking’s system now promises reconciliation only for September.