The Caterer
Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

Round table: Online hotel booking

04 May 2006

For quite some time now there has been a love-hate relationship between hoteliers and third-party online booking sites such as Expedia and Travelocity.

In the beginning, hoteliers were all too glad to have this new channel, helping to fill empty bedrooms, especially in the post-9/11 downturn. Yet as the hotel sector recovered, many in the industry began to feel they had opened a Pandora's box and were losing control over their ability to manage room rates according to supply and demand.

The issue came to a head in 2004. In a high-profile bust-up, InterContinental Hotels Group (IHG) ditched Expedia and Hotels.com, saying it would work only with distributors "who clearly present taxes and fees to consumers, who respect IHG's trademarks and ensure reservations are guaranteed through an automated and common confirmation process."

Further concerns were raised over the amount of profit being given away to these online distributors. Respected industry figures such as Bob Cotter, then chief operating officer at Starwood, warned that the issue presented the greatest-ever threat to the future of the hotel industry.

Better relations?
So where are we now, some two years down the line? How are relations between hoteliers and online distributors? It was with these questions in mind, and in association with online travel service Opodo, that Caterer last month organised a round-table debate at London's Dorchester hotel, bringing together some of the leading players in the field of hotel distribution across Europe.

A key message to emerge from the discussion was that while hotel groups have embraced the Internet as a means of reaching their customers, they now understand the medium much better and are wrestling back control of their own destiny.

One way in which they are doing this is an increased focus on their own branded websites. "We have quadrupled our budgets this financial year to invest in the internet," said Anwen Parry, head of distribution and brand marketing at Rocco Forte Hotels. "There's a lot of focus on the brand site, which we feel could do with a lot more development."

Ghislain d'Auvigny, vice-president of distribution sales for Accor, took a similar view. "Our main focus is to promote our own brand site and portal, which produces more than 80% of bookings," he said. "It's the best way to get in touch with our customers."

Philippe Garnier, Hilton's director of commercial development, agreed. "We're very keen to promote our brand website. That's where we have the lowest cost of distribution."

At the same time as developing their own sites, the big chains are grasping the benefits of working with third-party online distributors. Providing, that is, that they are the right partners, complementing the group's strategy and giving access to the right markets.

"Of course third parties are important as well and we want to work with as many as possible - as long as they understand our strategy and help us fill the gaps where we are not strong enough," d'Auvigny commented. His view was backed up by Andrew Rubinacci, vice-president of business development at IHG. "Our strategy is to use third-party internet sites to extend the reach of our brands, and get access to customers we wouldn't otherwise," he said. "We have seen fantastic partnerships that benefit both parties."

Be selective
Parry added: "We're very selective about which companies we work with. They really have to reach our market." Rocco Forte Hotels is keen to work with third parties that can help it tap into new markets, such as the Far East.

Despite this rapprochement, the issue of who is in control of room rates is still a major bone of contention. A survey carried out by Caterer and Opodo in advance of the round table found that the ability to control rates was what hoteliers prized most about having their own websites (Caterer, 13 April, page 11).

"It's very important that the hotels have control of their pricing and inventory and should not be led by the third-party distributor," said John Ryan, director of hotels at Opodo. Accor's d'Auvigny agreed: "One of our key statements is rate parity. We want customers to find the same rate for the same product at the same time wherever they look," he said. And Christian Fiederer, vice-president, Europe, Middle East and Africa, for Worldhotels added: "A hotel needs to control the sale price."

Following IHG's lead, other chains have also adopted a get-tougher approach to their intermediaries. Hilton's Garnier, for example, reported: "We have come up with a strict approach that we're rolling out with all
our partners, based on fairness and added value."

And it's this question of "added value" that really appears to be exercising the minds of the hotel chains. Much of the talk among the panel was of third parties bringing something extra to the table in future, rather than simply continuing to sell room-only packages in competition with the hotel chains' own websites.

A further key issue is that of commissions paid to online intermediaries - the hoteliers thought they were too high and not structured in the most beneficial way.

"We need to make sure we have a sensible cost of sale, that commissions make sense and provide value for what they offer us," Rubinacci said, while d'Auvigny spoke of the need to reduce the gap between how much the customer pays and how much of that ends up in the hotelier's pocket. "We will value those people who can conserve those costs that have absolutely no added value," he said. "There are some things that are done 10 times and are costing everybody a bomb."

There was also talk of structuring commissions to make sure third parties were incentivised for bringing in valuable additional business.

"I might not be willing to pay anything for a one-night business customer," Rubinacci said. "But for an off-season, weekend customer,
I might be willing to pay more." His point was echoed by d'Auvigny, who said: "We're ready at a certain level to give more to partners who provide us useful business."

Wrong Content?
Another concern was that of site content - images and descriptions of the properties - and the fact that on some third-party sites this is often out of date and potentially damaging to the hotels' brand image. "Keeping property information up to date is a challenge for us all," Ryan said.

Fiederer talked of sites sometimes taking six weeks to update content. "The experience we have on some third-party sites is a nightmare," he said, adding that ideally property information should be updated as rapidly as changes in price.

One thing delegates were agreed on was that the whole area of online distribution remained in its infancy and further changes were inevitable. In fact, Accor's d'Auvigny suggested that traditional distributors such as tour operators and travel agents had so far failed to embrace online distribution. "When they do, it will change the battlefield," he said.

One problem for the established online booking sites is the pressure they're under from "metasearch" sites that scour the web for the best deals and are usually paid for the number of visitors they drive to a site, rather than receiving a commission on completed bookings.

Whatever the future holds, it seems the larger hotel groups are at last beginning to call at least some of the shots and should be able to spearhead change in the online arena, to the benefit of all hoteliers.

Round the table…

  • Iain Ainsworth, senior vice-president, sales and marketing, Design Hotels
  • Ghislain d'Auvigny, vice-president distribution sales, Europe, Middle East and Africa, Accor
  • Christian Fiederer, vice-president, Europe, Middle East and Africa, Worldhotels
  • Philippe Garnier, director, commercial development, Hilton International
  • Majse Gustavsson, regional channel director, Europe, Middle East and Africa, InterContinental Hotels Group
  • Anwen Parry, head of distribution and brand marketing, Rocco Forte Hotels
  • John Ryan, director, hotels, Opodo
  • Andrew Rubinacci, vice-president, business development, InterContinental Hotels Group

Advice for independent hotels and small chains

"More and more customers are moving online, if not to shop then at least to browse. It's essential that your product is visible."
Philippe Garnier, Hilton International

"Your image online should reflect the quality in your properties. The content, images, everything."
Anwen Parry, Rocco Forte Hotels

"Form a strategy, have a plan of action, be prepared to invest money in it. If you don't focus on the content, branding and positioning, you will fail."
Iain Ainsworth, Design Hotels

"Understand what the different models are and understand what works for you."
Philippe Garnier

"Build your strategy; choose your partners. It's a mistake to be focused on the short term only."
Ghislain d'Auvigny, Accor

"Don't be afraid to ask questions and get advice."
Iain Ainsworth

"Don't fall too far behind because in six months everything you know will be wrong."
Andrew Rubinacci, IHG

"You need to have a strategy online or else it will run away with you."
Majse Gustavsson, IHG

"Be selective and work with online travel companies that offer rate flexibility and not simply one rate type. See them as a shop window to bring you new customers you may not already have access to."
John Ryan, director hotels, Opodo

About Opodo… Opodo is a pan-European online travel brand, which is owned by nine of Europe's leading airlines - Aer Lingus, Air France, Alitalia, Austrian Airlines, British Airways, Finnair, Iberia, KLM and Lufthansa - and by Amadeus GDS, the travel industry technology provider. It launched its first site in Germany in 2001, and its UK site the following year. It now operates in nine markets with access to flights from more than 500 airlines, more than 65,000 hotel properties and 7,000 car hire locations worldwide. In addition, it offers package holidays, city breaks, villas and rentals.

www.opodo.com
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking