The Expedia Marketplace

I am a hotel consultant with Strato Hotel Consultants and we speak with owners and operators everyday and many fight or complain about working with the OTAs. It is currently futile. The OTA's are the only part of the travel industry that is up year over year, Expedia 17% up year over year...you can not fight it....get a piece and move on.

What you say is correct in a way. Expedia does get new people in, their power is their marketing. But the travelers are still there and without expedia they will use someone else. I stopped using expdia and created my own marketing. Got ads out into mags pushed my website etc. Now my website accounts for 60% of my revenues. I can invest more into advertising and it is something that I can control. I am not subject to Expedias rules.

Mr. Hartesvelt, Your point is well taken, yet I think that you too fail to recognize the issue. Let's boil this all the way down to the basics. It starts with hotel demand and an investor/operator willing to invest in meeting the demand. And after choosing to move forward in this business, the hotelier has a number of other decisions to make, starting with product type and service levels. And finally, the hotelier must look at driving demand to his/her hotel. First, a comprehensive business plan and marketing plan are in order—this may include a well-recognized brand name or affiliation with a large marketing/reservation and support system, a la Choice (as a franchise sales guy, I’d suggest that it should). And then, of course, there are association memberships, etc. So now is a great time to evaluate incremental cost/benefit of each tactic: for instance, the hotelier can assume that a 7-10% franchise fee can deliver X number of room nights in a year; membership in the local chamber and CVB yields an additional Y nights for a small fixed amount; and then there are many other tools out there, such as the OTAs or even third-party marketing firms such as yours. In each case, the hotelier needs to consider the incremental costs for additional room nights and what it means to the bottom line--I'm sure that you are quite familiar with the need to constantly justify ROI to clients. So the primary question seems to be whether Expedia asks too much for what it promises to deliver hotels. Expedia has perceived a sense of despair in the industry, as well as a need to choose: the OTA can either take its share of the downturn or it can attempt to exploit the travel industry’s desperation with higher rates. It was, after all, Expedia who tried to change the contract, thus risking a stalemate. So it’s Expedia’s turn to come back to the table with something better. Thankfully, Choice Hotels International stands united against overly aggressive terms for its franchisees. While some may see this as a loss to specific hotels, Choice is uniquely able to mitigate those losses and simultaneously earn greater respect and gratitude from a vast franchisee community. Meanwhile, Choice truly earns its keep as a franchisor and a leader in the industry when we need it most. Respectfully yours, Patrick Brennan P.S. I work for Choice but write this out of my own volition. My employer is not responsible for these views, nor do I have any direct influence in this matter.

Internet changed many ways we conduct our purchases. Because of the technology, almost ALL of the major changes resulted in more efficient business model and thus resulted in CHEAPER prices. This is not the case with Expedia selling hotel rooms, it is very clear to me that Expedia is not being fair. Too bad Choice's counter part Wyndham (Days Inn Super 8 Travelodge) and Best Western do not have the courage to join Choice yet.

This debate is truly interesting because Expedia, along with all its brands and other competing online aggregation and booking engines, is neither a wholesaler nor marketplace. However, they do resell wholesale contracted inventory within an online marketplace. Like any negotiation or deal, the real debate is in the value and terms of the service provided. When a hotelier refers to these sites as a wholesale business or marketplace, they loose. In other words, these services are channels and should be managed accordingly. Prudent contracts, room allotments, pricing and availability need to be managed by the hotel operator, not a wholesale vendor, marketplace or channel. Furthermore, any reliance on a single channel destines a property for failure and positions the brand to be taken advantage of though inordinate terms. In today's transparent world, aggregating and wholesaling inventory online is here to stay. Hotels and brands must embrace selected channels and hold them accountable without giving away the house. That's marketing and revenue management. The marketing mix needs to include social media strategies to manage communications and online presence while channels need to be monitored and yield managed by the property, not the other way around. Kudos to Choice for taking responsibility for their business. As I understand it, they are willing and eager to work with the online channels with reasonable terms.

It's true! Expedia is not a travel agent (the name they picked for themselves in their re-imaging a few years back) nor a management company. But they are also NOT a marketplace. They are and always will be a lodging wholesaler. All be it a monster-sized wholesaler! When a hotel or any merchant for that matter, can sell their product at retail prices direct to the consumer and not use a wholesaler they should be able to do so. That's the free market. The internet is a marketplace and what Expedia was brilliant at was a multifaceted, multimedia marketing campaign that made their top of mind awareness well, tops in the industry. The succeeded at marketing themselves directly to our guests to use their internet booking portal. And we gave them the inventory to do it. It seems that those days may be coming to a close.