You Can't believe Everything You Read Watch-out for Hidden Motives.
By Neil Salerno
Thursday, 9th February 2006
Thanks to electronic online newsletters and other media; we have access to news and articles from all over the world. This is how we stay current with travel industry trends and learn new ideas. Whether or not we agree with everything that is said, these online publications have become a necessity to those who want to stay informed.

Prejudiced articles are usually taken with a grain of salt, when we realize that the information contained in the article is heavily slanted towards promoting the author's own business. The trick is to discern the motive.

You can imagine my surprise when I read such an article (You Paid How Much?), written for and by a major UK consumer online and offline newspaper, about third-party travel aggregators. It was only after reading the entire article that I realized that the author is obviously biased and has a lot to learn about hotel Internet sales; especially bizarre when the sign-off line leads to the newspaper's own online booking portal. 

The premise of the article was "Do online travel agents always offer the best deals?" Not any more, said the author. That statement immediately grabbed my attention. Apparently the author doesn't consider his company's booking portal to be an online booking agency. The article discussed air travel as well as hotels; since I am an hotelier, I will only address the field with which I am most familiar.

The author goes on to say that he checked several booking portals (online agencies) and found that the rates on the online travel sites were higher than the hotels' own web sites; amazing; this, in spite of the fact that one of the travel aggregator sites "guaranteed" having the lowest rates.  

First-off I was unaware that any online travel agents ever really offered the best deals, no matter what their web sites may have said.

Hotel franchises started all that nonsense. Apparently, the author doesn't understand that first, hotels submit rates to the travel sites and that one rule of hotel electronic marketing is to create and maintain rate parity among all sales channels. Apparently, the sample hotels used in his article don't understand rate parity either.

Online travel agents or travel aggregators use the rates provided by the hotels they sell. If these hotels are foolish enough to offer higher rates through online agents than they do on their own web sites, that's their big shortsighted mistake.

The author of that article attributes the latest increase in direct-booked sales to the assumption that some hotels offer lower rates on their own sites than they do through third-parties. The premise is that people use travel sites to shop rates; then book direct. This may be true for many people, but frankly, I think the increase in direct bookings is more a result of improved online marketing and better site design on the part of hotels.  

Unfortunately, many hoteliers resent the fact that online agents are in business to make a profit. Shameful, I know. Can you imagine actually wanting to make a profit?

Third-party agents spend $millions to expose hotels to the marketplace; even hotel franchise chains can't afford that kind of exposure. It's their "cost of sales". Thanks to third-party web sites, hotels get world-wide internet exposure, which would be difficult to obtain through their franchises, alone; impossible for Independent hotels.

Short-sighted hoteliers want the business, which the third-parties can provide, but resent paying commissions and marketing expense. The rate games these hotels play are designed to make the guest absorb the commission by marking up the rates they provide to online agents. Does this make any sense to anyone?

If you hired a high-powered sales person to sell incremental business, would you give them only higher rates to sell and resent paying this person? Maybe some hotels would resent it, but they would be darn happy they got the extra business.
If you need business, and third-party online aggregators can provide that business, then "suck it up, folks". They can produce needed business, but not for free. To make any attempt to pass this expense on to your guests is irresponsible and threatens to weaken public credibility in the entire online travel industry.

So everyone understands; hotels, and only hotels, control the rates which are offered on third-party web sites. To twist the facts and place the blame on the third-parties is unfounded. To be foolish enough to believe that guests only use third-party sites to comparison-shop is laughable. To encourage people to do so is just as laughable.

Frankly, I wish third-party sites would exclude rate cheating hotels and insist on rate parity. It would be a cleansing action.

There will always be many people who prefer the convenience of one-stop shopping for airline, hotel, and car rentals. There will also be many people who will forgo the extra effort to search the net for what may be the "best bargain". This was true before the Internet, with offline travel agents and is still very true today.

For hotels that need additional marketing and the incremental business available through travel intermediaries, online or offline, please understand that the cost of this new business is an investment in future business. Next time, they may book directly with you anyway.


Neil Salerno, CHME, CHA, Hotel Marketing Coach www.hotelmarketingcoach.com

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