Growing tension between hoteliers and OTAs
In 2008, over 60% of Expedia's revenue came from transactions involving the booking of hotel reservations, with less than 15% of its worldwide revenue derived from the sale of airline tickets.
This Just In: I have just heard through the industry grapevine that Expedia has cut off negotiations with Choice Hotels and has removed Choice properties from its sites, which include Expedia.com and Hotels.com. Choice Hotels, similar to all other major hotel brands, has been working consistently to negotiate a renewal of a brand-wide wholesale agreement with Expedia.
For some time now, we have been hearing from many industry sources that during renewal negotiations Expedia/Hotels.com has demanded 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 sites, penalties to properties that do not use their sites 100% of the time, etc. These contract renewal “negotiations” have been described to us by some participants from various hotel companies as “here are our terms - take it or leave it”-type of meetings and “practically lack of any essence of a real negotiation,” etc.
In other words, these new terms and conditions demanded by Expedia will effectively take away hoteliers’ rights to manage inventory and rates at their own hotels, destroy channel management and rate parity, and will eventually lead to a long-term erosion of hotel brand and price integrity in the same manner it did after 9/11 in 2001.
Hoteliers should learn from their past mistakes and prevent history from repeating itself. The Hospitality industry should applaud the fact that finally someone is standing up and supporting its franchisees and hotel owners. Similar to Choice Hotels, hotel companies should take a bold stand in support of their long-term interests, and tell Expedia that they wouldn’t sign an agreement that would give Expedia the right to become hospitality industry’s sole revenue manager and ability to manage hoteliers’ decisions on rates and inventory.
Read the full story at:http://www.hotelmarketing.com/index.php/content/article/growing_tension_between_hoteliers_and_otas/