Are relationships thawing between OTAs and brands?

By Colleen Isherwood, Editor

For years, part of every brand conference message was a warning about the evils of online travel agencies (OTAs) and how their inordinately high commissions were sucking the profits out of hoteliers’ pockets.

But times are changing. In December, I attended back-to-back conferences in Las Vegas: the Red Lion Hotels Corporation  (RLHC) conference and the Expedia Partner Conference.

The last session I attended at the RLHC conference provided a great segue to Expedia. Melissa Maher, senior vice-president, global partner group at Expedia, was on hand to talk about the recent Expedia/Red Lion deal. And she noted that Best Western and Marriott had also struck deals with Expedia this year.  

Last August, Expedia and RLHC began offering RLHC’s exclusive “Hello Rewards” member-only rates on Expedia.com and Hotels.com (in the U.S.), and providing direct member sign-up for Hello Rewards from these sites. 

“It can be difficult for brands to generate any real, meaningful demand or ROI though loyalty programs without spending substantial amounts of marketing dollars on a long-term basis,” RLHC CMO Bill Linehan said at the time. “Our approach is to be extremely respectful of the guest and the channel they chose to make their booking, so we in turn view OTAs like Expedia as partners and make sure we leverage their marketing and innovation investments to drive both customer acquisition and future loyalty.”

When Melissa Maher addressed the RLHC conference, she referred to Linehan’s goals for the partnership. “He wanted to convert Expedia customers into Red Lion customers, and he wanted to grow Hello Rewards. 

“It’s a way to drive business direct to you,” she explained to the audience of RLHC franchisees. “If they leave Expedia and didn’t book with us, then there is a Red Lion Hotel offer for a particular hotel or brand, that links them to the hotel site.” 

The 2016 results for Red Lion show the program is working, with room nights up 37 per cent year over year, packages up 56 per cent and mobile bookings up 41 per cent. 

In September, Expedia announced a new partnership with Marriott International, which integrates Expedia’s technology to power Marriott’s own dynamic packaging platform “Vacations by Marriott” on Marriott.com in the United States. 

“We believe there is considerable untapped opportunity between our two companies to drive value to hotel owners and travellers alike by strengthening our Vacations by Marriott’s offering,” said Arne M. Sorenson, CEO of Marriott International.

In mid-November, Expedia and Best Western Hotels announced a strategic venture that includes the adoption of Expedia’s MeetingMarket software by more than 200 Best Western Hotels across Germany, making Best Western the first global hotel brand to white label the technology.

Starting early this year, MeetingMarket will be integrated into Best Western’s German homepage, www.bestwestern.de, allowing it to strategically direct its meeting and conference business using Expedia’s technology. 

Using the MeetingMarket software, not only can customers instantly check availability and pricing information, but they can also independently configure and book meeting rooms, accommodation, food and equipment with just a few clicks. The dynamic platform accelerates and simplifies a process which has been largely manual, inefficient and time-consuming for hotels and event-planners. Hotels are also provided with the tools to monitor and manage their MICE sales more effectively with detailed performance reports and data on their competitive set. 

Three things have happened over the past few years to change the OTA/brand dynamics.

Brands are recognizing Expedia’s test and learn environment that allows the company to leverage its technology to identify and test new products that meet partner business goals, while also adapting to changes in the marketplace.  

Scale is becoming a good reason to partner with them. Greg Mount, president and CEO of Red Lion, provided the analogy of where mustard is placed on a grocery shelf. “Where do we have our hotels placed on the shelf and how do we stand out?” he asked. With all its subsidiaries, Expedia simply has more shelves.

There’s something else that’s working to ease the brand/OTA wars. “Our commissions have been coming down year over year for the past seven or eight years,” said Expedia CEO Dara Khosrowshahi to media at the conference. 

“The Internet is a scale business, and commissions can be very competitive with any distribution system.”