It’s (Way Past) Time For Hotel Chains To Take More Control Of Their Inventory

Dear Hyatt (and Starwood, Marriott, Hilton, though I don’t value each of you as much as my Hyatt relationship),

Why do you let the likes of Expedia control so much of your inventory? Sure, choice is good. And, there are plenty of infrequent travelers that use online travel agencies (OTAs) to figure out where they want to stay.

But, really. I used to work in the hotel industry a mere 15-ish years ago. Back then we were concerned about people booking outside of our channels and paying outsized commissions. The only thing that’s changed in 15 years is how much commission the hotel chains are fretting over.

Now, I’m not recommending anything drastic like pulling their inventory from sites like Expedia, Travelocity, Orbitz and the like. But, come on, let’s do a better job selling in-channel.

Recent entries into the OTA world Points Hound and Rocket Miles have exposed this gap again with what appear to be successful business models. They’re paying frequent travelers like me 500 to 1,000 miles for a one-night stay at certain properties. And, in the example of Points Hound, they’re doing it with rates that are valid for all my Hyatt Gold Passport benefits (they refer to those as “Double Dips”).

So, Hyatt pays them to book me through a third party (in some cases, Expedia). Points Hound has enough money to pay Expedia some fee for booking the room, give me a boatload of miles, and assumedly still take a profit for themselves.

For the first time in years, those business products have me booking some of my stays through other channels, for business Hyatt was already going to get from me. And, I’m not alone. Others are much more committed to getting those rebates/incentives from other channels.

Again, I’m not saying Hyatt (or any other chain) should stop providing inventory to OTAs. But, maybe take a page from Starwood’s book? They had a recent promo where they gave bonus points for booking rooms through their mobile channels, like an iPhone app. To me, that’s just a thinly disguised way to steal a little business back into their direct booking channels. And, why not? It’s a pretty cheap incentive, one that costs nothing if the customer books elsewhere and saves money if they book through your channels. Sure, you could argue that some customers were going to book through your direct channel anyway, but it’s a small price to pay to cement those behaviors.

So many people have been trained to use the OTAs for their bookings. And, even in the face of significantly reduced earnings, the OTAs are still attracting a ton of bookings.

I’d prefer that hotels don’t go the way of Frontier Airlines, who penalizes customers if they book through OTAs. I still believe this can be done with a carrot, not a stick.

So, how about it Hyatt? Blaze this path and start convincing more customers to book through your channels. Us greedy points junkies can be retrained for just a few extra miles and points here and there.

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3 Comments

  1. So you want the hotels to offer more bonuses for direct bookings. They do in the form of allowing any loyalty credit. The only exceptions I’m aware of are corporate TAs and PointsHound. And, incidentally, the Double Up bookings don’t actually go via the Expedia interface as I understand it; they are direct bookings just like a corporate TA so the margins are lower.

    You’re going to earn points if you book directly and not if you don’t. You seem to be asking the hotels to give you even more points for the exact same behavior. I’m not so sure that’s a reasonable request.

    1. The margins might be lower on the Double Dip rates, but the bonuses PH pays out are very similar to the standard offers that go through 3rd party platforms. That either means they’re losing money or there’s enough profit to give away those miles.

      What I’m advocating is the hotels offer a similar amount of incentive directly to the customer instead of paying it to PH or similar companies so they can have more control of their inventory.

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