Hoteliers get Web discount war warning

Hoteliers using Internet companies to sell rooms at last-minute discounted rates run a serious risk of permanently driving down room rates while losing loyal customers, hotel managers were warned last week.

Speaking at the Master Innholders' Hotel General Managers Conference at London's Savoy hotel last week, Ian Wagge, vice-president planning and distribution for reservations systems company Rezsolutions, said that hoteliers "could go badly wrong" in dealing with Internet companies.

One of the main problems, he said, was that customers who had paid the full rack rate could easily discover that other guests might have paid about 50% less for their rooms by booking through the Internet.

Wagge said that increased use of companies such as Lastminute.com and Priceline.com, which promise customers the lowest prices, could lead hotels into a savage discount culture similar to that of the travel industry.

"Do you want to teach your customers to become discount travellers and teach your rack rate customers that you are ripping them off?" he asked.

Eddie Lubbers, international hotels manager of Internet company Lastminute.com, said that many hotels ask that the name of the hotel is not revealed on the Web site. "Otherwise there is a risk of dilution of the brand," he said.

He argued that use of such services benefits hotels by exposing them to a whole new customer base.

But delegates at the conference remained wary of relying on a service which could damage relations with their corporate clients that have long-term agreed discounts.

"It could ruin our bread and butter," said Robert Savage-Hanford, general manager of the Flemings Mayfair hotel in London.

"It does work, but you've got to be careful not to sell a room on the Internet too early. We have all got used to going to a travel agent the week before you want to go abroad to get a good deal, but the hotel industry should avoid this. It could open a whole can of worms."

David Field, general manager of the 48-bedroom Dormy House hotel in Broadway, Worcestershire, said that the systems could be best used as an additional way to advertise special weekend packages rather than as a last-ditch attempt to sell rooms.

"I think it will be used more and more, but we would use it only to promote packages that we would advertise in the local paper. We're not suddenly going to discount rooms and risk upsetting people," he said.

by Christina Golding

Source: Caterer & Hotelkeeper magazine, 3 - 9 February 2000