With hotel chains such as Hilton Worldwide and Marriott International making a major push for direct bookings and offering loyalty program members lower rates than they give to online travel agencies, Priceline Group CEO Darren Huston isn’t happy about some of these moves.
“I don’t appreciate some of the actions that are taken on a chain level sometimes … ” Huston said during Priceline’s fourth quarter earnings call February 17. However, Huston characterized Booking.com’s relationships with hotels as “tight.”
The comments came in response to a question about Hilton Worldwide getting more aggressive in its marketing and chains becoming more stingy in giving sites such as Priceline’s Booking.com last-room availability.
In fact, Hilton Worldwide this week launched an advertising campaign, Stop Clicking Around, which it called the largest in the chain’s nearly 100-year-old history, promoting direct booking. iSpot.tv estimates that Hilton has spent $1.3 million on the television commercial, which has had 49 national airings from February 15 to 17, in the U.S. with much more to come.
Differing Views From Chains and Properties
Huston, who said that 10-15 percent of Priceline’s business comes from global and regional hotel chains, pointed to a frequent split between the desires of chains and the owners of individual properties.
Many property owners are “agitating to get their fair share” of bookings and most want to “lean into” the Booking.com model because otherwise their volumes won’t grow and bookings will go to competitors, Huston said.
Huston said some chains never gave Booking.com last-room availability although many do. He said Booking.com’s “take rates” are stable despite the moves by some chains.
On the question of rate parity and most favored nation clauses, which have been weakened by new laws in Europe and negotiations between the chains and online travel agencies, Huston said rate parity is still important so Booking.com doesn’t undercut chains on margins.
Hotels need to offer great pricing to enhance conversion as customers don’t want to overpay, Huston said, adding that the marketplace will dictate some of these issues regardless of the rules.
Asked about the impact of a new law in France that undercuts rate parity, Huston said: “Parity in France is at least as, if not more, healthy that most of our markets in the world.”
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