Last updated: 12:30 PM ET, Fri April 29 2016

What Hotel Chains Stand to Lose From Direct-Booking Push

Hotel & Resort | Patrick Clarke | April 29, 2016

What Hotel Chains Stand to Lose From Direct-Booking Push

Photo courtesy of Thinkstock

Expedia reported better-than-expected first quarter 2016 financial performance Thursday. 

But president and CEO Dara Khosrowshahi also used the announcement as a platform to discuss the state of the company's new Accelerator program and to encourage hotel chains to maintain partnerships with Expedia or risk losing a key audience. 

During Thursday's conference call Q&A session Khosrowshahi was asked about the impact of recently launched direct-booking campaigns from Hyatt and other hotel companies designed to draw travelers away from online travel agencies like Expedia. 

While the impact on Expedia has been minimal thus far, the company sees potential pitfalls for hotel chains that offer their best rate exclusively to loyalty program members who book direct.

On the flip side, participating hotels are benefiting in multiple ways.

"It is very early at this point, but we are not seeing any significant effect on our volumes," said Khosrowshahi, referring to the impact of the chains' direct-booking movement.

READ MORE: Marriott Rolls Out New Benefits for Loyalty Program Members

"What we are seeing is that the hoteliers who provide us with the best pricing, with the best inventory are gaining share on a relative basis in the marketplace, and they gain share two ways. One, just directly through bookings; and also, remember that they also gain audience share because they are higher up in the sort order and very often consumers are clicking from our results and going and checking out the hotel direct."

Khosrowshahi added that gaining share in the Expedia marketplace is important given its growth within the overall travel market.

"I think that the supply partners who play well with us, who really provide a terrific experience for our customers over a long period of time are going to gain share in our marketplace."

READ MORE: Expedia's 'Accelerator' Program Allows Hotels to Bid on Placement

Meanwhile, Khosrowshahi said Expedia has rolled out the Accelerator program — which provides hotels better placement in Expedia search results in exchange for higher commission — globally and has seen "strong engagement" with thousands of hotels participating.

Although the long-term impact of these direct-booking initiatives on both OTAs and hotel chains remains to be seen, it appears the latter are committed to driving more guests to direct channels. Because not only are Hyatt and others offering the best available rate to members who book direct, but they're also sweetening the deal with exclusive benefits that OTAs can't always offer.

In addition to OTAs like Expedia, the direct-booking programs haven't always been a hit with traditional travel agents, who have at times been critical of the campaigns for overlooking or excluding them.


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