Hotels.com had a compelling reward proposition, though it had been devalued over the years. You earned 10% of your room rate back, redeemable after every 10 nights.
When Expedia decided to unify their loyalty programs across brands, not just including Hotels.com and Expedia itself but also Vrbo, they cut the rebate value of Hotels.com bookings by 80%.
- Earning and spending rewards across Expedia’s properties made sense
- These small rewards would bring customers back to spend more across their platforms
- But the earn rates were too low, especially for Hotels.com – going from a generous program that rebated a good portion of spend to one that rebates very little
- Some of that was made up for in hotel discounts for elite members of the program, but only on some hotels and certainly not helpful to anyone expensing their stays
Sure, you could now spend points (and earn them) on short-term Vrbo rentals, but there was no longer a compelling reason to book through Hotels.com. And that has shown up in Expedia’s results.
Expedia itself saw a 20% increase in hotel bookings in the second quarter. Expedia Group overall, though? Just 10%. That says Hotels.com was flat or down in an environment where it should be rising. What’s different is that there’s no longer a strong incentive to use Hotels.com for members in the U.S. or U.K. where the new OneKey program has rolled out.
As a result, Expedia is pausing the OneKey rollout to members in the rest of the world, not wanting to do further damage. They say they realize it doesn’t make sense because Vrbo’s market penetration isn’t as great elsewhere.
The takeaway is that loyalty value propositions do matter, devaluations can harm a business, and when anyone other than Delta does it consumers do know the difference. In fact, there was a limit even for Delta – last fall the reaction to announced changes at the Atlanta-based carrier so scared them and their financial partner Amex that those changes were paused and sweeteners given to customers as a rapprochement.
For U.S. and U.K. members there’s a conundrum. They could increase hotel-earning, but don’t seem to need to at their Expedia property. Do they push business over to Hotels.com with higher earning there? Do they let members convert back their points into a separate program? Or do they accept that they’ve made the Hotels.com property less valuable? It can be tough to undo damage once it’s been done.
I book alot of travel for my company. Before one key, hotel.com was the cheapest on alot of hotels and the cash back was great. Now you barely get anything and priceline is almost always cheaper. It could be less the one key roll out and the impact of other changes. If I can get the same hotel 5 dollars a night cheaper somewhere else but Im only gonna get a couple bucks in rewards at hotel.com Ill always go with the other place
Absolutely right, Gary. For many years my wife and I were very loyal Hotels.com members. Once they cut the “stay 10 nights get one free” program to “here’s a few bucks for next time” we dropped it as a primary option. While I’ve used its recommended hotels a couple of times in Europe as low cost options, we’ll stick with chain programs where the incentives are worth bothering about. But didn’t they realize this would happen? The explanation for the change was almost insultingly cheery.
I’m UK based and after the rollout last month I cancelled 8 or so upcoming bookings (around 30 nights) and rebooked using a mix of direct bookings and the AAdvantage Hotels platform. I may not get my 10th free night but it’s a great way to boost AAdvantage status which is more valuable.
I used to book a bunch of $400-1100 per night “rooms” on Hotels.com at ski resort places. They gutted the program, and my bookings on there pretty much came to an end for just about everything. And for more mundane stay purposes, I could literally do much better by using cash-back portals and the like for direct hotel bookings than use hotels.com.
They devalued their own property by devaluing their own program. But that may be only part of the equation. Hotels have been much more aggressive in their negotiations in bulk selling of rooms and that may have hit the sales on Hotels.com harder than Expedia’s overall hotel sales if Expedia sells more kinds of rate plans for a given hotel in a given geography than what Hotels.com sells.
Worse than that. When they did the roll out they never informed me via email. They cancelled a 100$ credit from hotels.com I had without notice after giving me like 1-3months to use it again with no notice.
I said fine not using you at all anymore.
Ditto the above. I was an exclusive Hotels.com customer for a decade. That all stopped when the reward plan changed. Haven’t even looked at the site since then. Now, I just go to Google and they aggregate everything from all platforms.
It was bad. I will say that, after a year away, I used Hotels com twice in a month. They often have better rates than the credit card portals, and I still have residual Silver status for VIP rate access. I found a couple boutique properties with better rates there. In my case, I was also cashing out some portal rewards for gift cards, so I could use those for about 25% of a multi day stay in Athens. It is annoying that they won’t let you use One Key cash and gift cards on the same booking. Making the rewards less liquid = less value overall.
Somebody in sr leadership should be getting the opportunity to “spend more time with their family” because of all this.
It shouldn’t have come as a surprise to mgmt. Or taken this long to publicly recognize.
The gutting was mind boggling. The choice between keeping points locked up in their proprietary program or going else where for more points in transferable programs was obvious from day 1.
Since the prices across Expedia Group are the same, there probably was some shift of people booking from Hotels.com to Expedia.com. I don’t think you can attribute the entire 20% jump in one platform to net new customers, or the loss of ~10% of Hotel.com customers to non-Expedia platforms.
Thanks for pointing this out. I had mostly booked hotels on Hotels.com. But now I’ll be a free agent, either accruing on chain program or just using Kayak to find the cheapest deal.
Serves them right and glad consumers voted with their wallets. United and American should watch this really carefully as should Hyatt.
Delta masked some of it but even there the cracks have shown from eroding benefits that have systematic liftetime value to high value customers
a lot of my former hotels.com bookings are now on expedia as they to run better promotions with Rakuten
I wonder if Gary Leff has uncovered a travel hack?!
Hotels.com in Canada (hotels.ca) still has the 10 nights, get one night free rewards program. Maybe use a Canadian credit card and Canadian address. Maybe even that might not be necessary?
They had a terrible roll out. After about a year of hype, I still think it is confusing, and there is no uniformity across the sites. But I now look at Bookings.com a lot more and see some gret rates there. I have decreased my use of hotels.com by about 90% and usually book directly now. I used to do up to 50-60 nights a year on hotels.com and now hardly use it. They lost a lot of loyal customers through trying to cheapen down their rewards while making it seem like an advantage to have the three products (Expedia, VRBO, Hotels) rolled into a single reward platform. The result for me: super bump up in direct nights at Marriott and more direct bookings for holiday properties after shopping around. Expedia thought they were doing something savvy but expert ttravelers are not fools.
I was a devout Hotels.com user until I returned from a recent 3 week road trip. Over 21 nights booked through hotels.com in tge end I earned a pitiful $58 in one key cash. I will never use either hotels or Expedia again. Booking directly with Hilton or Marriott
I worked for Expedia back then, and I was part of the team that built that OneKey program. After the program was built, a week later Expedia let go of the product team that worked on that program in the US, and moved it to an unknown team in India. After that Product team layoff, no one on the new India team had any knowledge of the work so it was just patch work from there on. It did not make sense then why Expedia Management (chief technology officer Rathi Murthy and Sreenivas Rachamadugu) were pushing all new team in India and letting go of US team. It makes sense now, because they were incentivized as their India company benefitted from these new hires.
Many of us knew the impact to Hotels.com but for management to save face, we were being pushed out the door so we could not speak the truth. We will see what happen from here on..
Cancel OneKey and roll it back.
I used to book 50+ nights a year on Hotels — the 10% back made up for the lack of points, etc from the hotels themselves. But now it makes zero sense to use Hotels unless it’s some random hotel that’s otherwise hard to book. I’m glad the numbers show this so clearly. Maybe management will step back from the brink on this one.
Expedia revoked an $800 One Key promotion they offered (10x One Key Cash) back in January for Beach vacations. Booked a Florida package in January, travelled in May, got $800 and change in One Key Cash. Last week they said it was an error and drained my One Key Cash. I’m heartbroken as I had hoped to capitalize on this and work towards a points and gift card earned vacation in winter for my family. I tried customer service who said they’ll look into it and get back with me. But I fear I’ve been scammed.