The marriage of convenience between hotels and online travel agencies gets rockier whenever one of the partners goes too far to gain the upper hand. Expedia’s recent changes to its bundled offerings, branded as Add-On Advantage, violates the entire basis of the opaque package or wholesale model and oversteps an important boundary.
When I spoke to fellow executives at a hotel technology conference last month, we had seen a small news item about Expedia’s program, but nobody was really sure about the most important details. It was unclear how long ago Expedia implemented the changes, which allow consumers to book a hotel room at a discounted “package” rate after a flight has been purchased, instead of requiring the entire travel bundle to be purchased at once.
Hotels need to find out right away if their package agreements are subject to this new offering and must talk frankly with their market managers to reconcile these changes with their distribution strategy.
The consumer benefit to Add-On Advantage is obvious, but what about for the hotels? Both the property and the OTA want what’s best for the customer. But the partnership that serves these guests doesn’t work if risk and reward aren’t being shared equitably.
How Can Hotels Limit Their Exposure
These “packaged” rates could seriously degrade a hotel’s brand by going from an opaque component of a bundle to a searchable price that consumers can compare with other properties’ rates. However, the OTA still gets its commission from every piece of the transaction
Room rates offered as part of Expedia Add-On Advantage can be even more competitive than the OTA’s member pricing in some cases.
Yes, the discounted rooms are still “gated,” because the “packaged” room rates aren’t searchable to the entire public, only to the people who have completed the purchase of a flight. But heavily discounted rates are still exposed, and the hotel can’t control who can find those rates. That’s certainly enough reason to opt out of Add-On Advantage, but if packages matter to your distribution strategy, can you opt out but remain in a traditional package booking path?
