In what may ultimately develop into a massive change in the way online travel agencies and hotels do business with one another, Expedia Inc. has quietly introduced changes in the way hotel properties make it to the top of the page on brands such as Expedia.com and Hotels.com.
Although it hasn’t been officially launched or widely publicized, Expedia’s market managers began offering hotels the ability to bid their way to the top of Expedia’s sort order of listings.
In an interview with Skift, Expedia Inc. CFO Mark Okerstrom described Expedia’s new Accelerator program for hotels, a plan that turns Expedia’s search results’ pages into a “marketplace” and has hotels competing against one another for bragging rights in Expedia’s listings.
The placement on a page is all-important in driving hotel bookings.
“We are also offering the opportunity for hotels to augment that quality nature of their listing with incremental economics to help give them a little bit of a boost,” Okerstrom says. “It is a program we call Accelerator. And so we just transitioned the model to one of much more of a marketplace. So I think we will leave it to the various hotel companies to dictate for themselves how they use our marketplace and we would encourage them to do it in a way that maximizes what’s best for them.”
Okerstrom says the transition in Expedia’s hotel business model has been under way for a year. The basics of the Accelerator program were finalized in the fourth quarter.
“The best thing about it is that for our consumers you’ve got a huge selection of hotels,” Okerstrom says. “And we’re confident that you can find a hotel for the right price and the right room type and availability that suits them [consumers] well.”
Details are scant about precisely how the program works but it involves properties being able to bid for placement in various slots on the page. In a way, it resembles metasearch, where hotels bid on a cost per click basis although the Expedia Accelerator program isn’t necessarily based on clicks.
Okerstrom explained it in the following way after we asked him about the weakening of rate parity in Europe and hotels beginning to offer lower rates online for their loyalty program members than they are offering to online travel agencies such as Expedia and Booking.com.
“I think it is something that we have to some extent catalyzed,” Okerstom says. “We have transitioned our business over the course of this last year and we are going to continue to transition in 2016 to much more of a marketplace. You know a marketplace where hotels can compete against the right people – not us – compete against each other for the vast amount of traffic and bookings that our booking platforms and fantastic brands around the world provide.”