By Martin Kelly, Editor, Travel Trends
Yin and yang, give and take – push and shove.
Tensions between Asia Pacific’s biggest suppliers and distributors are escalating over direct-only discounting by major hotel groups such as Accor and Rydges that exclude distribution partners like Wotif.com, Expedia and Travelocity.
Rooms have been pulled, concerns raised, relationships taken to new places.
Accor has been discounting faster and more consistently than a $2 shop, most notably with its recent 3-Day Super Sale across all brands except Sofitel and Formule 1. Rates from $US35 were only available through its new regional site, accorhotels.com.
One week later, Rydges put all its room on sale for $A95 exclusively through another new site, stayanytime.com.au.
All the usual distributors were ignored.
Amid the rhetoric, one struck back.
Expedia, its regional hotel strategy led by Cyril Ranque, pulled all relevant Accor inventory from its local websites for the duration of the sale, then did the same to Rydges a few days later.
A point was made by both sides, but at the end of the day the sales were clearly worth it for the hoteliers.
For example, Rydges is rumoured to have sold around 45,000 rooms at $A95 a pop, pre-paid, so they get the money now.
Accor, which had 1,000,000 rooms up for sale, declined to comment on numbers but Maria Taylor looked pretty satisfied when rebuffing the question.
The big online travel agents are anything but satisfied and have done some tough talking about taking unspecified “action” against hoteliers withholding rates.
Publically, it was smiles all around at the No Vacancy conference, but things could get a touch ugly over the next year or so.
These are just the opening moves of a drawn-out war.
Large, organised hotel groups are certain to hold an increasing number of sales.
Accor and Rydges will be joined by others with the critical mass to run national or regional offers supported by heavy marketing.
They don’t want to pay online agent commissions of up to 25% to sell a $US40, $US80 or $US120 room, they want online direct.
This places Expedia, especially, in an awkward position. It’s retaliated a couple of times – is this policy now enshrined or does it treat each sale differently?
The other online travel agents can also jump up and down but it’s hard to see any winner in this other than the hotel groups.
At the end of the day they control supply and economic imperatives are moving all of them in the same direction the airlines took many years ago.
For hoteliers, there is no real option – they have to cut costs and website direct is by far the most profitable sales channel for hotels.
Of course, the hotel groups won’t push too hard and may start using this strategy as a bargaining tool on commissions, which have to come down eventually.
Backwards and forwards, push and shove, give and take.
Travel Trends: March 26, 2009