Expedia and Choice End Feud

Expedia and Choice Hotels have been in a whirlwind of a feud / Expedia website

ATLANTA – Choice Hotels International and Expedia Inc. announced Thursday night that their public fight is over. After a months-long battle that resulted in the ugly scene of Expedia delisting Choice Hotel properties on its web sites, the hotel group has now hammered out a new three-year deal with the online travel agent's group of websites that includes room listings on over 80 branded sites, such as Expedia, Hotwire and Hotels.com.

"We’re pleased to be working with Choice in an agreement that respects the guiding principles which we operate under," said Dara Khosrowshahi, CEO of Expedia, Inc. "We welcome Choice back into our marketplace, and look forward to delivering value to their franchisees."

The five-month long impasse in negotiations circled around depressing already low room rates down lower, particularly as they relate to rate parity and last room availability.

Expedia has required room rate parity, which bans hotel owners from offering greater discounts or asking higher room rates of Expedia's customers than that which the agency has already entered on its various sites. Deep discounts are offered by Expedia even on premium days when there is a surge of travelers because of a local event. That depresses room prices and erodes a hotel's profits.

Last room availability requires hotel owners to make their last room available to Expedia customers at the agency’s discounted prices, regardless of the market strength and demand for such rooms. Hotel owners typically charge a premium price for their last room. The last room availability policy prevents the hotel from bumping up the price to Expedia's customers for the last room.

Hotel consultant and author of several books on the industry, Stan Turkel observes, “The last thing a hotel owner wants is for Travelocity or Expedia to sell their last room at the lowest possible rate.”

The Asian American Hotel Owners Association, a group of hotel owners that account for some 40% of all hotel room inventory in the United States, has opposed attempts by online travel agent services, such as Expedia, to compel hotel owners to relinquish information about all room inventory and to control the room pricing as a prerequisite of being listed on their website. On November 6, AAHOA’s president, Fred Schwartz, said, “With the current economic conditions, it is critical for our members to maintain occupancy levels, but not at the risk of losing control of their room availability and pricing. AAHOA owners have invested their life savings in building and operating their hotels, and we cannot look the other way when third party agencies are trying to wrest control from the members in order to gain a greater share of the market.”

But something has changed. Hotels within the Choice system worldwide will now participate in the Expedia marketplace. Within a week, Choice Hotel property listings will start to be available on Expedia.com and Hotels.com sites worldwide, and later on Hotwire.com.

Stephen P. Joyce, president and CEO of Choice Hotels International, declared, “Choice Hotels and Expedia worked together to establish a new agreement that is mutually beneficial and enables hotels in the Choice system to effectively manage their businesses." Choice Hotels is a franchisor of some 6,000 Comfort Inn, Quality, Clarion and Econo Lodge franchises, plus a number of other brands.

No details of the new agreement have been released.

Regarding the terms of the new agreement, Turkel states, “One hopes that Choice is able to maintain at least some control over their inventory. One would guess that Choice would not give that away. On the other hand, you can imagine that Choice's president Steve Joyce was getting plenty of complaints from franchisees who weren't getting any bookings from Expedia over the time that this dispute was in the works.”

One industry leader, a hotel franchisee, speculates that possibly blackouts on high travel dates were given in which the online services could not undercut hotel owners on their room prices.

AAHOA Chairman Tarun S. Patel, a franchisee of Choice Hotels, states, “There must be a common sense approach to working together that aligns with the basic rights of hotel owners to control their own room inventories.”