Out A New Promo That Emphasizes Some Of My Thinking On Hotel Booking Channels

I was waiting for Hilton to announce their fall promo before I finished up my breakdown of all the fall hotel promos this week.  I didn’t think it was likely coming soon since they have a current promo that runs until the end of September.  Of course, shortly after I published my breakdown Hilton announced a promo, though I suspect there’s still more to come.

Deals we Like has the scoop on the new Hilton offer for 1,000 bonus points when you book with their iPhone app.

Hotel Booking Channels

 

Not too long ago I had written my thoughts on hotels taking more control of their booking channels.  The hotel industry has used third-party booking channels for quite some time.  A reasonable concept at inception, the hotels sacrificed a percentage of their rate in exchange for more bookings.  After all, hotels only have one opportunity to sell a room each night.  If it goes empty, they lose the only opportunity to capture that revenue.

And, customers have flocked to the booking engines because it’s easy for them to search across multiple brands quickly and easily.  For customers who don’t have a brand preference, sites like Expedia and Travelocity are great for them.

Hilton is taking a page from the playbook I laid out a few weeks ago by launching a promo incentivizing customers to book through their channel.  Sure, it’s a promo for their new iPhone app.  But, they’re also not paying an outside commission on those rooms.  Just like customers were trained to use Expedia and Travelocity, they can be re-trained to use the hotel’s own resources.

And, I don’t think the quasi-merger of Travelocity and Expedia makes things better for the hotels.  Wandering Aramean points out why this is bad for consumers, but it’s also bad for hotel chains as Travelocity and Expedia in theory have more bargaining power if they bring more business to the chains.

The hotel chains themselves have made some noise in this space, with a handful of them spinning up Room Key, so they must recognize there are better ways to fill their rooms than abdicating the sales effort to online travel agencies (OTAs).

What the hotel chains are supposed to bring to a franchisee hotelier is a big chunk of rooms to fill their hotel on a nightly basis.  It makes sense that an independent hotel would need OTAs more than one affiliated with a large chain.

But, it doesn’t make sense anymore for hotel chains to dump inventory to the OTAs.  With the proliferation of the internet, mobile apps and smartphones, there are plenty of ways for hotel chains to amend the road signs that were constructed directing customers to the OTAs.

I think it will require some small incentives along the way, similar to airlines offering 500 miles to check-in online when they introduced that technology.  Now, who doesn’t check-in online?  It saves time.  But, in the beginning, the airlines thought customers needed to be trained to use the new technology.  Sure, they could go the stick method like Frontier Airlines and make it even harder for customers to earn elite benefits when booking through the OTAs.  But, that’s obviously not enough since a good number of OTA bookings don’t qualify for those benefits now.

Hilton is making a good move here.  I think they’ll be rewarded for it, if only incrementally right now.  But I see this as the next step for hotel chains to be more profitable without raising room rates.

 

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2 Comments

  1. Bonuses to use the brand site rather than the OTAs are (at least in internet years) ancient. Just ask the airlines which used to offer 500 points for online bookings and then unceremoniously killed those programs once they hit the appropriate level of critical mass.

    The LNF/BFG//whatever else guarantees they offer also suggest that they are taking the “Frontier” approach, offering the lower fares directly rather than through 3rd party channels. They aren’t good at it, but it is there.

    From the consumer perspective the 1,000 points is a trivial offer which doesn’t do much to incent behavior. Especially not when the overall value of hotel status is so minimal.

    1. Seth, as you note, the airlines stopped offering 500-point online bonuses when they achieved ubiquity. Since the OTAs still make up a large number of bookings for the major chains (though not a majority), they obviously haven’t reached critical mass.

      And, you assume consumer perspective on hotel status through your lens, one that believes that hotel status has little value. I respect that opinion and understand why it has little value for you. But, there are many people who get plenty of value from hotel loyalty based on their travel patterns. Both types of travelers will continue to exist for the foreseeable future, so everyone won’t automatically decide that Rocket Miles is better than hotel status.

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