Analysis of HDZ's pre-election promise: here's why the booking service sounds weirder than the president's 8,000 euros
When delved deeper into the business model of web services, this idea represents probably the most foolish promise of ten years ago
Set up in this way, the state booking model, in addition to being fundamentally meaningless and doomed to failure, would also deprive the state budget of several billion kuna a year, with a business model weaker than Croatian Railways. Then why did the HDZ propose him?
As one of the pillars of the economic program, economic sovereignty, proposed by the ruling HDZ, is the promise of establishing a state booking service for tourist facilities.
According to the program published last night, such a state booking would have a commission of only 5 percent, which would compete with global services that take more, and would enable a new tourist takeoff, thousands of jobs, new hotel rooms and so on.
The idea of a state booking service is markedly missed and profoundly meaningless; when it delves deeper into the business model of the web service, it is probably the most foolish pre-election promise in ten years, according to which even 8,000 euros of the former president does not sound so weird.
WHY IS THIS NOT EVEN SIMILAR TO WIND FARMS
Government interventions and controls are feasible in industries where supply is limited by natural resources or regulatory steps - energy comes to mind first - so if concessions and permits fully control the supply of wind farms, it is possible to set electricity prices that none of us can object to. .
Not because we enjoy expensive electricity, but because we have no real alternatives. If we could not ride HŽ's tracks and trains, we would certainly not ride them. But in rail transport, the pendulum is deep on the supply side, and the railway supply in most countries is controlled by the state.
SKORIN PARKING AT THE HOSPITAL AND TWISTED LOGIC
The situation is similar in any industry where production capacity or access to goods is key to placement. The heavier the goods for production or procurement, the greater the market power of the bidder. Telegram wrote about the case of Miroslav Škora , whose parking near Zagreb's Merkur Hospital caused a series of controversies about the nature of the market.
Miroslav Škoro referred to the laws of the free market, which enabled him to charge a high price for parking. That's basically true, he just overlooked a few key things: first, parking at a city hospital is notoriously inflexible. If it is too expensive for people, there is no alternative, nor will any other provider be able to offer cheaper parking so easily.
Secondly, access to that market, parking in front of the hospital, in this case was provided by the mayor of Zagreb. As in the above examples of energy and railways, the state or local government interfaces mainly where folders can be put on offer of goods or services.
NO CONCESSIONS OR DEALS WITH THE MAYOR ARE NEEDED
Digital services, however, operate on a completely different principle. Their production is cheap, simple and accessible to everyone, they do not need national concessions, acquaintances with the mayor or rare ores.
For that reason, the digital offer is mostly endless - there are almost unlimited number of blogs, sites and services in the world - so the market power is no longer hidden in those who offer, because they offer everything, efficiently and cheaply, but in those who ask. The key is in demand, not more supply.
Through hard work, Booking.com, Expedia and AirBnB have built positions from which to control demand. They are used by millions of users, and the more users use them, the more apartments and hotels they will offer - simply, a relatively small number of those who can afford not to be on one of the global services.
THEY PLAN TO FIGHT WITH BOOKING.COM-TYPE SERVICES. REALLY?
If you have an apartment, you can advertise it on all global platforms in a few clicks, which most apartment owners do. The state booking service would therefore have to compete with billions of dollars to attract users, as it cannot control the offer here (except to ban people from accessing Booking.com).
Which means that for users on search engines and social networks, they would compete with the largest global services, so that German or Czech tourists would get a listing of the state service when entering "Veli Losinj" or "Rogoznica".
HOW TO FINANCE A MULTI-BILLION DOLLAR FIGHT?
Booking.com and Expedia spent $ 11 billion on Google advertising last year, and that amount is growing every year. AirBnB spends a little less on Google - their model was set up differently from the start - but they invested about $ 2 billion in marketing last year.
These are the amounts that should ensure some kind of user demand for the new Croatian state mastodon - provided that we believe that the people who created e-Citizens will know how to create a top web service that can compete with the best in the world.
However, the HDZ program envisions a commission several times lower than that usually charged by such services. And the commission is what the business model is based on and from which people, technology, investment in Google and so on are paid. What, then, is meant to finance the struggle of several billion dollars for the favor of the people who google Lošinj?
WHY DID THE HDZ PROPOSE SOMETHING SO BANAL?
Set up in this way, the state booking model, in addition to being fundamentally meaningless and doomed to failure, would also deprive the state budget of several billion kuna a year, with a business model weaker than Croatian Railways. Then why did the HDZ propose him?
Probably guided by logic, that people with apartments might sound good if someone takes away 5 percent of their commission, instead of the current 20 or more percent.
WHAT THE HDZ NEEDS, NO ONE IN THE WORLD HAS INVENTED YET
However, they fail to see the key thing: while their focus for the last ten years has been on hard jobs such as energy, almost all enthusiasts, especially on the coast, have tried to start their own booking services in Croatia.
Owners of tourist facilities know very well how meaningless such attempts are. And forced control of consumer spending on web services in a democratic world has not yet been invented by anyone.
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