WSJ: “Hotels Turn to ‘Member’ Discounts to Battle Travel Websites”

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Wall Street Journal yesterday run a story about “member only” discounts that were introduced by many hotel chains this year when they are trying to battle with the OTAs like Expedia and Priceline (these own many other brands).

WSJ

Even in the United States, people book more hotels via OTAs than directly with hotel websites or apps. Outside of the US where chain hotels are not as prevalent the share of bookings made via OTAs is even higher.

You can access the WSJ article here of which below is an excerpt:

Although the hotels advertise the “member rates” or “exclusive discounts” broadly, they are technically only available to the millions who have signed up for their loyalty programs, which means the hotel brands don’t have to provide the same discounts to online travel sites.

The contracts that hotels sign with third-party websites often prevent them from offering lower rates on their own sites, though hotel brands say they are free to offer the discounts to members of their loyalty programs.

“The owners are going to be the ones to pay the price for the discounting strategy,” said Cyril Ranque, president of lodging partner services at Expedia. “We believe that it’s not a sustainable situation,” referring to the loyalty discounts.

The moves step up the tug of war between hotel brands, which have tried for years to convince guests to book through their own apps, and websites such as Expedia and Priceline that have been gaining a greater share of hotel bookings. Investment funds and franchisees that actually own the properties are caught in the middle.

Conclusion

I understand why people book via OTAs and I book them via them too. Why would I book via airlines’ websites when OTAs provide better interface (and usually you can get around some ticketing restrictions) or why would I book on independent hotel’s website?

OTAs still often offer better pricing, although all the hotel chains claim that the best prices are offered on their respective websites. Trying to convince consumers, they all have Best Rate Guarantees that on many occasion are just hot air. They are merely using Best Rate Guarantees for advertising purposes without really standing behind them.

Also, if someone is not member of hotel or airline loyalty program or is brand agnostic, OTAs offer better visibility of all hotel and flight options available while offering some OTA loyalty program points in the process.

Of course all these changes once you become status member with one or number of the hotel programs and the benefits only apply for bookings made directly.

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