Hotels and online travel booking companies tend to have a marriage of convenience – one that savvy travelers can exploit.
When hotels are having trouble filling rooms, they will grudgingly pay Expedia and other online travel agencies commissions of 15 to 30 percent to help reduce the vacancies. But when the beds are filling up, the hotels would much rather avoid those hefty commissions by having travelers book directly through the hotel’s website, call center or authorized brick-and-mortar travel agent.
Which is why lately, with average occupancy rates in the United States at the highest level in a least a generation, hotels are dangling inducements to get you to book direct. The tensions between hotels and online agencies are nothing new. But the continued rise in occupancy levels is making hotels feel they have increasing leverage.
The lures might include upgrades to better rooms, free shuttle service to and from the airport, complimentary breakfast or drinks at the bar.
But lately the big savings are available to travelers who have signed up for a hotel’s loyalty program – typically at no cost to the consumer – and book directly through the hotel’s channels. The room rates can often be 10 to 20 percent lower.
“The biggest weapon now is members-only rates,” said Lorraine Sileo, senior vice president of research at Phocuswright, a travel research company.
As a group, online travel agents still account for about one-third of all bookings, compared with only about one-quarter for hotels’ own websites, according to Phocuswright.
But the hotels have growing clout. In the 20 years or so since Expedia, Travelocity and other online players began enabling consumers to easily act as their own travel agents, the U.S. hotel industry has never had a better occupancy rate than it does now.
This year through July, on average, more than two-thirds of the nation’s hotel rooms have been occupied, according to STR, a hotel research firm in Hendersonville, Tennessee. That is the highest average occupancy rate since 1984, said Bjorn Hanson, a professor at the Jonathan M. Tisch Center for Hospitality and Tourism at New York University. A big reason is that the supply of new rooms has not kept up with growing demand.
Megan Klein is among the travelers who now book directly with the hotel whenever possible. “If there is a great rate on the hotel website, I'll book online,” said Klein, 37, president of FarmedHere, an indoor sustainable farm just south of Chicago.
She also likes to call the hotel to speak with someone at the front desk. “I like to have more of a personal experience at the hotel,” she said. “I like to support the actual business.”
But that is possible only when Klein already knows what hotels to check within a given city. While traveling internationally for 10 weeks in 2011, she relied on Agoda.com to find and book hotels in Cambodia, Hong Kong, Laos, Singapore, Thailand and Vietnam.
Some travelers simply prefer the convenience and ease of comparison shopping via the online agencies.
Trevor Schneider mainly travels domestically. He typically waits until flying to his destination to book a room with the online travel agent Hotels.com, comparing last-minute prices at several hotels simultaneously. He also likes the free night that Hotels.com offers after he books 10 nights.
“I like it all in front of me at the same time,” said Schneider, 37, a brand ambassador for the wine and spirits importer William Grant & Sons. “I can book a hotel in one minute.”
A recent Morgan Stanley Research report described the relationship between hotels and online travel agents as one between “frenemies.”
It is particularly when hotel business is down, such as during the 2008 financial crisis and the recession that followed, that hoteliers are more willing to use online travel agencies to move excess inventory.
But the online travel agents contend that they can provide additional business to hotels in any business cycle.
“We are driving incremental business to them, business they can’t get on their own,” said Melissa Maher, senior vice president of Expedia, which owns Hotels.com, Trivago.com, Hotwire.com, Orbitz.com and Travelocity.com, among other sites.
As an example, she cited “package business,” hotel rooms that are sold with an airline ticket, rental car or both for one price. “Our customers tend to be brand-agnostic,” Maher said. “They’re usually not looking for a specific brand.”
But the hotels themselves want travelers to be brand-conscious. “The hotels are trying to building brand loyalty,” said Hanson at NYU.
In February, Hilton Worldwide began an advertising campaign called “Stop Clicking Around.” Geraldine Calpin, Hilton’s chief marketing officer, said it was meant “to change the perception that the best place to book is on an O.T.A.,” using an industry abbreviation for online travel agent.
Hilton offers lower rates to members of its loyalty program, Hilton Honors, who book through the company’s outlets.
“Hotels are about guest experience first and foremost,” said Michelle Woodley, executive vice president at Preferred Hotels & Resorts, a company that manages independent hotels.
In an effort to compete with price-comparison sites like Hotels.com, Preferred Hotels & Resorts has developed a pilot program to let travelers compare its own rates with what the online travel agencies are listing for its rooms.
Booking directly with a hotel does not always mean doing it yourself. Rebecca Proctor, based in Aurora, New York, is the creative director for MacKenzie-Childs home furnishings and spends a lot of time in India, Shanghai and Hong Kong. She tends to rely on word-of-mouth recommendations on where to stay, and then book on the hotel’s website.
Recently, when she scheduled a trip to Hong Kong, she thought she had a pretty good hotel rate. But her locally based business agent was able to call and get one for 20 percent less.
“The people locally can negotiate a better rate,” Proctor said. “I’m a business person. I’m managing a budget. Negotiating the best rate is paramount to me.”