Hotels have a love-hate relationship with online travel agencies like Expedia and Hotels.com. On the one hand, hotels depend on those sales channels for a significant percentage of their bookings. On the other hand, those bookings come at a price, literally: The hotels must pay the OTAs a commission, which makes indirect bookings less profitable.
If the hotels had their druthers, all bookings would be made directly, via the hotels’ own websites or mobile apps. That means no commissions on the sales, and the hotel has the opportunity to up-sell and cross-sell its services during the booking process.
To ensure they’re maximizing the amount of business that’s being booked directly, the hotels have taken a multi-pronged approach. First was the lowest-price guarantee, invoked to assure travelers that the prices shown on the hotels’ own websites are the lowest available anywhere; no need to waste time surfing the OTA sites. The second was the linkage of loyalty programs with direct bookings. OTA bookings do not earn loyalty points. And, taking the best-rate guarantee a step further, loyalty program members receive a discount on room rates, but only when booking directly.
Those efforts notwithstanding, travel consumers have continued using OTAs, both to research their options and, critically, to book their stays. A new study by Piper Jaffray suggests that they were right to do so. Or at least partially right.
As reported by Skift, the study compared prices for stays at 86 hotels in major cities worldwide as shown both on the hotels’ own sites and as shown on Priceline.com, Booking.com, Expedia, TripAdvisor, and Kayak. The results were as follows:
- At 66% of the surveyed hotels, the prices were the same through all channels.
- At 21% of the surveyed hotels, the OTA prices were lower, by an average of 4.2%.
- At 13% of the surveyed hotels, the prices were lower on the hotel sites, by an average of 3.8%.
So much for that lowest-price guarantee, right? However, the study opted not to use the hotels’ discounted loyalty rates for the comparisons, so it could well be that loyalty-program members are getting a better deal than indicated when booking directly.
And then there’s the matter of the points earned for direct bookings, and forfeited for OTA bookings. While loyalty programs have been steadily devalued, the programs and points do still have some value. And by anyone’s calculations, paying $100 and earning points is a better deal than paying $100 and earning no points.
In the end, there remains a strong argument in favor of checking both the hotel sites and the OTA sites, at least for travelers who are not loyalty-program participants. For those who are loyalty-program members, when the points and discounted rates are factored in, the case for OTA booking is much weaker.
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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.