Expedia’s Outrageous Behavior Spells Trouble for Hotels

The Prisoner’s Dilemma, the Stockholm Syndrome, or a Case of Both?

(This article comes from HeBS at www.hospitalityebusiness.com)

Does Expedia believe the hospitality industry has forgotten the tremendous damage done by online wholesale discounters (now called Online Travel Agencies – OTAs) in the period following 9/11? Has the current state of the economy revived hospitality “Stockholm Syndrome” in which the abused (hoteliers) feel such allegiance to their kidnappers (OTAs) that they will accept Expedia’s new anti-industry terms and conditions?

Pro-industry experts at HeBS and elsewhere are extremely concerned that Expedia.com and Hotels.com will effectively take away hoteliers’ rights to manage inventory and rates at their own hotels, destroy channel management and rate parity, and eventually cause a long-term erosion of hotel brand and price integrity in the same manner it did after 9/11 in 2001.

Read more below and in our latest blog posting: “The Prisoner’s Dilemma, the Stockholm Syndrome, or a Case of Both?”

Finally, please check out the results of our last Industry Pulse Poll, “Which Mobile Marketing Steps are Most Important in 2009-2010?” Then, click here to participate in our latest one, “Should Hoteliers Take a Bold Stand and Not Allow Expedia to Bully the Industry and Become the De Facto ‘Rate Manager’ of the Hospitality Industry?”

HeBS has heard from many industry sources that recent renewal negotiations with Expedia/Hotels.com have turned cutthroat, with OTAs demanding new terms and conditions that are against everything the hospitality industry stands for: last room availability, guarantees that the best rates are only found on Expedia/Hotels.com, penalties to properties that do not use these sites 100% of the time, etc. These contract renewal “negotiations” have been described to us by some participants as “here are our terms–take it or leave it”-type meetings that “practically lack of any negotiations,” etc.

But what has enabled Expedia to become the market bully? When Priceline eliminated airline ticket booking fees in the spring of 2009, it quickly gained 2% of market share from the OTA industry. Expedia and the rest of the OTAs shortly followed suit. Now, in order to remain competitive and to continue generating revenue, Expedia must increase its profits from the hospitality sector.

As the OTAs fight to survive, they are exploiting the vulnerable hotel industry to do so. Taking advantage of struggling hotels, the OTAs dare to demand increasingly high percentages and implement new fees. And hotels, scared to lose any revenue in a deteriorating economy, oblige.

Expedia is undoubtedly the most predatory of the OTAs. In addition to commanding concessions, it is also pitting competing hotels against each other to see which will provide Expedia with the highest returns in order to retain its “preferred status” with the company. Through these practices, 24- and 48-hour sales, and city-wide sales, Expedia has both convinced the traveling public that it is the last word in traveling and has attempted to set the hospitality industry back eight years.

So what should hotels and hoteliers do? What are HeBS’ recommendations in order to avoid a repeat of 2001 and maintain a robust travel sector? Click here to read more.

Industry Pulse Poll Results

Last month we asked, “Which Mobile Marketing Steps are Most Important in 2009-2010?”

The results were as follows:

1. Launching a mobile site for my hotel—43.4%

2. Creating an opt-in mobile list (M-List) of my customers—17.4%

3. Creating mobile applications (mobile apps)—17.4%

4. Launching mobile advertising (mobile paid search and banners)—8.7%

5. Launching text marketing—8.7%

6. Launching mobile CRM—4.3%

7. Wait and see—it is too early for mobile marketing—0%