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Log In / Register | Aug 15, 2018

Hotels Fighting Back against Discount Travel Sites

Hotels have been paying substantial commissions to online travel booking sites. They have begun taking aggressive action to book their customers directly, cutting out the middleman. Because of the nature of their agreements with booking agencies and U.S. government regulations, competing by dropping hotel prices is tricky, so they compete by adding perks, such as choice of room location, free meals and free Wi-Fi. Their tactics are bearing fruit:

Such efforts show early signs of paying off. The travel marketing firm MMGY Global’s 2015 survey of nearly 3,000 leisure travelers found that while third-party sites remained popular for comparing vacation hotels and prices, there was a noticeable drop compared to 2014 in how often respondents actually booked rooms through the sites. — Aaron M. Kessler & Julie Weed, The New York Times

Expedia is in a takeover mindset. Earlier this year it acquired Travelocity and last year it acquired booking website, which is Australian based and popular in the Asia-Pacific area. Hotel owners are especially alarmed at Expedia's announced merger with Orbitz:

Its proposed takeover of Orbitz would give the combined company control of roughly 75 percent of the entire domestic market for third-party online booking, according to the research firm Phocuswright, potentially giving it enormous leverage over the commissions that hotels pay for their listings. — The New York Times

U.S. Senators, activist group Consumer Watchdog and the American Hotel and Lodging Association have written to the U.S. Justice Department objecting to the deal, which the Department is holding up to scrutiny.


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