Is Choice Leading A Revolution?

POWER TO THE FRANCHISEE (PEOPLE) Lower booking fees means lower overhead and we know what that means,,,,

Dear all, we just wanted to make sure that you saw this follow up article published in Hotels Magazine in which our CEO applauds Steve Joyce. www.hotelsmag.com/article/CA6703495.html

We're a small company from Luxembourg with 4 hotels, and just removed our 4 properties from Expedia as well. So we fully support Choice Hotels in their decision, as Expedia, started to pull the same BS, with us...

Just like the last round (when the OTA's all started up) they are seeking to maximize their leverage. Until the industry (not the big boys, but everyone) stands up and says "we want to be partners, but be reasonable" nothing will change. I went though this at IHG and indeed particular franchisees were hurt. Though several people took credit for getting it resolved, the TRUTH is the economy improved to a point that IHG didn't need some of the individual players so the OTA's came back hat-in-hand and wanted them back. LESSON: Bargain while the economy is hot and lock in an agreement for as long as possible. How and when to do that depends upon the individual circumstances.

PATEL, you bring up a very sound analysis of the situation from a destination market hotel's point of view. However, you also seem to present this situation as one where Choice has staked its own internal system against the OTA business as a whole, when in fact this is all about two large companies among several in their respective industry sectors. When viewing this situation in light of a competitive business environment, it's tough to ignore the likely responses from each company's competitors and how they will impact negotiations. The reason so many hoteliers support Choice in this case is that we all hope for other major hotel organizations to jump on board or for Expedia's competitors to capitalize on the situation by offering even better terms to take market share. After all, the alternative that many naysayers appear to suggest is that Choice's competitors would capitalize on the situation by making their franchisees pay even more to Expedia, thus further deteriorating their margins in the long term. The best outcome for the industry is, of course, that Expedia's competitors take market share through aggressive discounting, in which case consumers will soon follow to wherever they find the best selection/deals. After all, anyone shopping sites like Expedia anymore is much more likely to shop around for a discount than other travelers. While Choice can and will exploit all of these other channels, Expedia's options are rather limited.

At the end of the day hotel company should think what is best for their hotel owners and not for their own brands. Operating companies barely take any financial risk, it is always the owners. Owners have sometimes the same feeling about parasite brands... why do you we have to pay so much for so little return, why the ceo of that company is paid so much for so little support in this time of crisis So is it really the best solution for hotel owners that Choice slammed the door on Expedia?!?

Well done Steve Joyce for having the guts to stand up to Expedia. For far too long OTA's like Expedia think that it's normal for the, "tail to wag the Dog." Hotels have to find their bark again and take control of their tails.

IN RESPONSE TO BERNIE: You are right from a traveler's point of view; however, if you invested a million dollars of your hard earned money; I don't think you would be talking this way. We have 9 properties in a gaming market (destination market) and over the past 15 years, we have seen the "traveler" evolve from shopping door to door for the best price to shopping online (which is effortless in comparision). In one way, we are not suffering as much because we never really wanted to rely on online reservations, so we did whatever it took to retain a guest once they entered our property. Those same guests have discounted rates on top of what they are getting online (just for being a repeat customer). What Choice is doing is both good and bad for the industry. They think they are starting a stike with Expedia and Expedia will give in. They couldn't be more wrong! When a guest goes to Expedia/Hotels.com to book a room, they are looking for the best bang for their buck. If they were loyal to Choice, they would just go to Choicehotels.com and look for a property. This is not going to hurt Expedia in any way. A guest is going to book, just from one of the "Non-Choice" properties. Our revenue has spiked since the Choice hotels were removed. Though I am enjoying the revenue, deep down inside I know I would have been horrified if I had a Choice property. It's nice that you posted a "traveller's opinion", but a traveler is spending a mere $69-$159 out of their pocket. It's the Choice & other hotel property owners, that have invested their hard earned money and entrusted a name such as "Choice" to make sure they won't do anyone harm in such an economic down-turn. To all the hotel owners: To make money, you have to spend money. Expedia normally charges 25% in our market, and we have offered them 30% just for them to place us on the top of the list. We understand 30% is a lot, but guess what, we are outperforming every brand name out there!

Hi all, I'm a business traveller and this is my point of view : Companies like Expedia simply offers me what I'm looking for; easy booking with a wide choice of hotels, flights and services against the lowest price. How do you all think this could be possible ? Because all of you cry babies have forgotten to really do your hotel job yourselves and turned in to managers in an office chair, counting the reservations and numbers instead of selling your hotel in the good times. Now the poor times have come and you suddenly see who has the real power. Don't cry. Take back the lead and become real hoteliers again; sell your own product, take really care of your guest and earn the loyalty of them so they return to your hotel no matter what. Don't cry over Expedia; they just do what you should do. Take control of your own business instead of putting your faith in someone elses hands. Use them or loose them, but don't cry if poor times have come and you are confronted with your own mismanagement. If you want to have business travellers to book directly than offer them good prices directly. Don't excuse yourself with high prices because of someone else takes the biggest cut of the cake. I wish you all good luck and wisdom and hope you find ways to make it profitable for everyone in the end.

To PREFERRED comment; You have no idea what you are suggesting. Hilton and Wyndham has already agreed to last room availability at very high commission levels. If you work in Hotel industry like I do, you shoudl know we are the most back stabbing bunch. Since Choice has been cut off from Expedia, a range of budget brands have contacted Expedia to buy banner advertising space on Expedia and hotel.com because they think there is more bookings to be had.

All hotels should start to boycott Expedia and OTA's until they reduce their margins/commissions to 10% like the rest of the Travel Agent World....they don't even have brick and mortar to support....10% is very fair as my hotel paid Expedia over $300,000 this year for just having a web site with a link.....Lets face it, the customer and owners suffer the most. If expedia does not play fair now when times are tough, they will be obsolete when the market recovers and the hotels don't need to pay margins in excess of 25%! Boycott now! Thanks Steve Joyce!!!

I wonder what Expedia thinks of all these Choice supporting comments? I work at a Choice property...but if I worked for Expedia I think I would be more worried.

Expedia has started contacting the Choice Hotels directly in an attempt to get them to violate their franchise agreements and sign individual deals directly with Expedia. The terms of the proposed individual agreement is even worse than what they are attempting to push on Choice as a whole. They are demanding a five year agreement with the LRA and pricing control. The hotels are wise to stand firm with Choice on this one as giving Expedia full control for the next five years would be a fatal mistake.

As a Choice Midscale GM, I applaude Mr. Joyce and the Choice Team for taking a stand against bully tactics. It may hurt the individual properties A LITTLE right now, but in the long run this is DEFINITELY in the best interest of the hoteliers. And I also like the fact that they immediate ramped up online marketing to help make up for it. Expedia did play a part in generating revenue for my property, but they are certainly NOT irreplaceable!

Adam, does this open the door for social media to gradually replace 3rd-party booking sites? Can operators boost revenue through cultivating property-specific communities of guests? Will their success be more profitable than using third-party booking channels? It depends on the level of trust operators create with their communities, and may already be happening. Am Oct 19th article by Max Starkov, "The Growing Tensions Between Hoteliers and Online Travel Agencies: The Prisoner’s Dilemma, the Stockholm Syndrome, or a Case of Both?," which suggests how operators can win their independence from OTAs, hints at the benefits of using these two direct online strategies to build profitable communities: 1. “Direct Online Channel: Invigorate the push in the Direct Online Channel on unprecedented levels. A comprehensive ROI-centric Internet marketing strategy can help hoteliers continue to generate much-needed incremental revenues and out-smart their competition. Hospitality eBusiness Strategies (HeBS) 2. “Local Direct Online Channel Strategy: Hotel brands and multi-property hotel companies should develop and implement a robust strategy to take advantage of abundant local revenue opportunities at the property level.” - Hospitality eBusiness Strategies (HeBS) Direct online channels could include your social media venues and your property’s website.

Can anyone confirm the commnets made by the Multi Fanchise Owner who saih Hilton agreed to last Available Room I find it hard to belive?

I find European based distribution channels negotiate more to win-win agenda. Expedia and Travelocity are too arrogant.

Hi everyone I work for Express by HI in US. Expedia is our second biggest OTA. But it our costliest channel as well. Our own website does not simply deliver, so we have to rely on OTAs.

IHG was able to maj=ke the best deal in the industry as a result of their stance and it still is better. The problem for Choice is that Hilton just signed a last room available deal at high percentages. Expedia is using that to bash Choice. They shouldnt be paid 5% never mind 18 25 or 30.

IHG refused Expedia a few years ago, and there was plenty of drumbeat about it at the time. They went back begging after a while. This time Expedia actually got a more lucrative deal from them ... When you do not have enough cash at bank to pay your wages, you will have no choice but to go back to Expedia or the likes of Expedia.

I truly hope that other Franchises do rebel against OTAs.. It has hurt my hotel a little already but still the mear fact that guests will come in that have booked with Expedia and end up finding out the actual rates of the hotel online after it is too late to cancel and get upset at "us" the hotel. I would have to say Thank Goodness

Ask an independent hotel what he thinks about OTAs and you should be happy if he doesn’t spit at you. The point is they take about 25 to 30 percent of the income from a hotel, and once they have done that they demand a certain number of rooms to be allocated to them permanently, whether they fill those rooms or not (at the hotel’s cost) and then they demand that nobody be given better prices than them. Sound crazy? Well it’s the hotel industry. Now if we wonder why hotel prices have gone up about 300 percent over the last 15 years then start looking in that direction. Because 30 percent mark-up is a lot! After being hoteliers and being disgusted by the greed, we started making websites for hotels and they love it. Now we're working on a larger online reservation site that's commission free. So is a revolution started in the hotel industry? Well, we think it started long time ago but now the chains have realized that it’s gone too far and they are getting on the bandwagon. And it’s only a matter of time before they will need to either change their ways or hotels will find other solutions.

After reading many of these comments I would like to point several basic ideas that may help. I find it amazing that many independent hotels hotels will feed the monsters by offering lower rates to the OTA's than on their own websites. This practice drives consumers to the OTA's. Every hotel in the world(branded or independent) should at the very least have a pay per click campaign that buys the hotel's name. When you let the OTA's buy your name for pennies and get the top position on the page you are losing money. That is a fact.

Orbitz also are just as bad, its not only Expedia.

It's easy for me to say, since I don't have any financial obligations in this battle, but I think in the long run Expedia will be hurt by this more than Choice. If and when word gets out to consumers that Expedia doesn't have the depth of inventory that its OTA competitors have, Expedia's customers will start jumping ship to Orbitz, Travelocity, etc. Now, I realize that doesn't help struggling hoteliers like isitme keep their heads above water in the short term. You and others in a similar situation have my genuine sympathy. But looking at the big picture for the hotel industry, I predict future generations of hoteliers will speak fondly about the day Choice stood up to Expedia.

hey did'nt IHG kick them (Expedia) out several years ago?

I work for an OTA not Expedia, but like someone pointed out earlier we do not own the hotel inventory, the hotels do. So, you do need to control it. My company does not demand that you give us rooms all we ask is that we are given the same ability to sell rooms as our competitors. We are just a channel of distribution. I agree with the hotels in that you should have the control and call the shots but there are many out there who look to us to tell them what they should do. Especially in these down times. Hotels should be telling us what they want to accomplish and then we can assist in meeting those goals? So, please all OTA's are not created the same nor do we act the same.

Most of the responders here are very fortunate to have full hotels and to be in markets not dominated by Expedia. In my market however, hotels are struggling. My competition felt an immediate surge this past weekend from my hotel not being sold on Expedia's sites. Expedia is the single largest channel into my market fater hotel direct business, and hotels.com having the greatest impact. It is great to say, "Go Choice!" when it is not your hotel now on the verge of bankruptcy. I treated Expedia as a valued volume customer, much like I do airline and railroad business - which by the way do not produce the same volume combined and enjoy lower rates. We in the hotel industry often try to change the way our customers do business; it has rarely worked for us. Guests want what Expedia provides. Choice has just taken the position that we don't need them as much was they need us. Expedia has no need for our hotels on their sites. So, since most of you are enjoying full hotels and great profitability, you can afford to send those customers to other product. My hotel's ownership is trying to raise the capital to meet our upcoming obligations without this tremendous source of revenues. Since you all feel the way that you do, why not campaign for Choice to let each individual hotel negotiate their own contracts with Expedia like we used to? You can then choose not to participate.

Break it down, what does Expedia actually provide for a guest? Nothing. I know that all hoteliers have had guests look at rates on Expedia and then call the hotel directly, because they still want to do business with the hotel not a third-party. Hotel companies need to stand united on this. Haven't our revenues suffered enough?

As a professional revenue manager, if you understand that both the merchant and opaque models of internet sales train guests to consider price above all else when choosing hotel rooms, you are correct. If it also seems to you that they lead to the commoditization of hotel rooms you are also correct. While in some cases, selected 3rd party web-site operators can be of great value, it is important for revenue managers to remember that these site operators do not own hotels, do not operate hotels, and possess no rooms to sell that have not been provided by actual hoteliers. The inventory they are supplied belongs to a hotel (franchisors need to rememeber this also!) Since rooms are the main product sold by your hotel, controlling how your rooms inventory is presented in the market is critically important. It must be done in a way that optimizes long-term revenues. Intermediaries that do not allow you to do just that they are working against your customer-centric revenue optimization efforts. It is interesting to note that some lodging industry experts are fond of using the airline industry as an example of how to effectively impellent yield management practices. It is interesting to note that in most cases these experts do not mention Southwest Airlines. Southwest Airlines tightly controls its flight inventory and its pricing. Their seats may only be booked on the web through their own proprietary website; www.southwest.com. As of today, you simply cannot book flights for Southwest Airlines on Orbitz, Expedia, Priceline, Travelocity, or any other third-party travel website. Thoughtful observers will note that Southwest Airlines also practices a very customer-centric differential pricing strategy and tightly controls its inventory and pricing. Some might point to this practice as one of several reasons why they are also the only consistently profitable airline operating in the US.

I am the GM of an independent property. We are currently negotiating with Distribution Companys for our GDS representation and find the Last Room Available requirement for the GDS's in the agreement. Expedia leads, everything related to them will follow. If Hotels don't get a handle on this soon we will loose total control of our inventory.

Our Revenue Mgr. says that the guy that brokered the Hilton deal for Blackstone is the brother of the CEO of Expedia's parent company. Any truth to that rumor? If so, I wonder if Hilton will play along with Expedia or if they may have made a better deal with them because of the nepotism. Personally I amd my GM support Choice's courageousness, although officially we cannot take a stand...yet. We get along better with the other OTA's reps already than Expedia's but they all have us in a tough spot and we'd like to see the balance of power back in the hoteliers hands where it should be. It isn't really serving the guests' interests either...they are actually paying more than they would be normally because of the exhorbitant fee/commission structure these OTA's charge.

@Not Amused - where exactly do you think Choice's revenue comes from? Choice stands to lose a lot of revenue, this is affects everyone. Choice's revenue is based upon your franchise fees. In other words, if frenchisees are losing revenue, so is Choice. They are working for your best interests.

boycott all ota..or dont give ny commission...WELL DONE MR. JOYCE..KEEP IT UP..N PERSUADE WYNDHAM & BESTWESTERN TO FOLLOW THE SAME..WHILE AIRLINE COMPANIES R NOT PAYING ANYTHING FOR BOOKING DONE BY EXPEDIA..WHY SHOULD HOTEL INDUSTRY PAY..ITS THE FRANCHISEE ( HOTEL OWNER ) WHO SUFFER..I THINK HOTEL GROUPS HAVE ARRANGEMENT WITH EXPEDIA N OTHER OTA..TO SPLIT THE EXORBITANT COMMISSION OF 25/30 %...IN TODAYS WORLD ITS EASY TO FIND HOTELS ON SEARCH ENGINE..WHICH GOOD FOR HOTEL WHO R TAKING THE MILLIONS OF DOLLARS RISK..N WORK LONG HOURS..N GOOD FOR GUEST TOO...AS THEY DONT HV TO PREPAY N GO THROUGH OTER INCONVENIENCY...REMOVE COMMISSION FROM ALL `OTA`..LIKE AIRLINE INDUSTRY...THEY( OTA ) CN CHARGE THE BOOKING FEE TO GUEST WHO WANT TO SHOP AROUND ON OTA SITES...THEY ARE PROVIDING SERVICE TO GUEST AND NOT THE HOTELS...KEEP IT UP CHOICE...70 % FRANCHISEES ( HOTEL OWNER ) R WITH U....

Remember when one airline began charging for checked luggage in 2008 and the rest of them quickly followed suit? Well guess what folks, if other hoteliers don't take the same stand that Choice is taking, you can bet that Orbitz, Travelocity, Kayak, etc. will soon be making the same demands as Expedia. We need to stand united on this matter and fight for the revenue that rightfully belongs to the hotels!

I am ashamed of Marc Z's flippant remark. It is people like Marc Z that got us in this fix of greed with OTA's in the first place

Choice doing good job for all hotel brand..We losing revenue becasue Expedia taking 25-35% on every reservation.Contact your CEO & tell them to boycott all OTA.OTA kill hotel industry.

What if everyone took away inventory for one week, and let Expedia feel the pinch for a bit. Paying 28% and being forced to Expedia's Terms and Conditions is crippling to an independent hotel such as mine. If a boycott is collusion, is the Expedia/Hotel.com empire not a sort of monopoly.

In theory I agree with Choice's stance - however, Choice owners like us are the ones caught in the middle. Choice is claiming to be doing so much for us and yet I doubt it will drive $0.01 to my hotel. Choice doesn't own any of its hotels so they don't have any real money to lose here. If Choice is serious about helping their hotels, give us a cash payment for that lost revenue. Anything else is empty rhetoric.

as a partner in 2 hotels which will be rebranded begining of 2010, the courage and leadership of Choice have persuaded me that we choose one of their brands for our hotels!!

Yes please all of you boycott Expedia. Remove you hotels from their websites and leave my hotels alone on their to get all the revenue.