Hotel Efforts to Get You to Book Direct Aren’t Working. Here’s Why.

Hotel chains want you to ‘book direct’ so they don’t have to pay commission to online travel agencies like Expedia or Orbitz, or other intermediaries. Yet hotel chains are spending even more on commissions than before they launched their latest book direct efforts.

There’s been a push for over a decade to get customers to skip travel agency websites, with two initial strategies:

  1. Leveraging their most frequent guests to book direct by refusing to offer elite qualifying credit on third party bookings and in the case of several chains refusing to even acknowledge a member’s hard-earned status if they booked through a third party.

  2. The introduction of porous ‘best rate guarantees’ that increasingly became marketing promises will little reality behind them — better rates were often found on third party sites but with inclusions like breakfast or parking, or for room types a chain’s website were showing as sold out, and so chains denied those guarantee claims.

Chains do pay lower commission rates than they did a decade ago. But they’re investing in trying to drive down those costs even further.

They used to say ‘you won’t pay a lower rate anywhere else’ now they say ‘you’ll pay a lower rate if you book through us’. Hilton calls it ‘stop clicking around’.


    Hilton’s commercials tell you that booking direct is so alluring!

They don’t usually say it, but many hotels will also assign the worst rooms to those who don’t book direct, here’s what happened when I booked a Marriott hotel through an OTA last year.

Since I wrote last summer that the book direct push didn’t seem to be moving the needle, in fact OTA bookings were up, it’s not really a surprise that hotel chains are seeing a rise in commission expense.

CBRE Hotels’ Americas Research recently released its 2017 edition of Trends in the Hotel Industry and, perhaps, the biggest trend in the report is that U.S. hotels are being much smarter about their finances than ever before.

…“The one expense item that really stood out was the 6.8 percent increase in commission payments made to travel agents, OTAs, and other intermediaries,” said Woodworth. “This is consistent with what we are hearing from our clients.”

This data seems to suggest that, despite the major direct booking pushes made by the hotels within the last year, that their efforts may not necessarily be curbing the amount of commissions they are paying to third-party distribution channels.

Third party travel agency sites serve a value creating purpose for consumers (even if most online travel sites are shockingly bad, or at least have failed to improve as much as I’d expect).

Hotel chains need third party travel agency sites because those sites help travelers figure out where to stay. If you know you need a hotel in Fort Lauderdale, not that you want to stay at the Hilton, you aren’t going to go to Hilton.com. Hilton.com doesn’t help you figure out if you should stay at the Hilton or the Hyatt.

And as much as hotel chains would love it if you’d use those travel agency websites to figure out where to stay and then leave to book on their own sites that’s a transaction cost which is difficult to push onto customers even for a 2% discount that consumers aren’t likely to know about (they don’t see it when searching Expedia) or believe is real.


Expedia Dancers Don’t Provide Customer Service. Flickr: Juggernautco

There’s plenty of space to do online bookings better than Expedia does, after all:

For hotel chains to shift consumers to book direct, they need to:

  • Show consumers the product that best meets their needs
  • Offer consumers the best price on that product
  • Give them the best user experience

So far the discounts on their own hotels only gets them a small piece of the way there. They need to improve their websites. A daring chain might buy another booking site and leverage their technology to let consumers compare their hotels with hotels in other chains and non-chain properties and offer a real best rate guarantee. In other words, a hotel chain would become a quality OTA to beat the OTAs.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Hotel chains really need to improve their Best Rate Guarantee programs. Just look at the threads on Flyertalk and you’ll see the many posts complaining about BRG claims that are rejected for ridiculous reasons (IHG, Hyatt and Hilton’s BRG in particular attract a lot of criticism).

  2. I have to say that I avoid booking chain properties via OTAs not because they’re more money or less convenient. I avoid the OTAs because every time I’ve been walked in the last ten years, it’s been on an OTA booking.

    I still will use an OTA for an independent property with a crappy website though. Better the devil you know, I say.

  3. It’s all very true. A few notes to add to the post:

    – Hilton Stop Clicking Around Campaign has nothing to do with helping hotels lower OTA commissions, and everything to do with Hilton Honors generating more revenue while getting hotel owners to foot the bill.

    – When considering overrides, elite benefits, brand fees and a host of other direct costs, OTA commissions are *NOT* a problem for MOST hotels.

    Fundamentally, hotel operators who are part of major chains have restrictions on what they can do at a brand level, and BRG is part of being with the mothership. I have personally pitched multiple ways BRG can be improved to solve guest issues AND be a revenue driver for the chain at the same time. Other start-ups and management consulting companies have done the same. The fact is – many hotel businesses are run just like they were in 1999.

    The need for change is low. Hotels by large are profitable, and when your occupancy is high, markets are growing and demand is strong – the need to improve quite frankly isn’t there.

  4. @Mark Ross Smith — truee, hotel properties are paying for points when they aren’t paying OTA commissions. hotels may not need to do much given their profitability and what they’re doing is trying to get the government to protect their turf rather than improving for consumers (lobbying to shut down airbnb, cause problems for otas)

  5. For the regular customer, the carrot of elite benefits and stay credits mean nothing. On the other hand, the threat of the stick (You’ll get a worse room if you book through an OTA) isn’t a claim that they would ever make publicly.

    Part of the appeal of the OTA model is it appears to be a straightforward process. You find a hotel, pick a room and book. I find hotel websites to be more deceptive with finding the best rate. You’ll find a rate listed but that is usually for a room type you didn’t want and also before tax. The mind numbing number of different packages (parking, breakfast, tickets, club access, double points, etc.) makes it even more difficult to learn if you are getting a good deal or not. I’ve found Hilton to be the worst in this because of the sheer number of different rates. For example, I’m booked in a room for an upcoming stay with the “Museum” rate. Its main advertisement is that you can visit the museum nearby. Not tickets included, just you’re staying close to the museum. This refundable rate was cheaper than AAA, Hilton Honors, prepaid rate and everything else buy I had to scroll through 10 different specials packages to find it.

  6. Totally agreed with Peter. I submit BRG / LNF claims all the time, and I essentially see it as a lottery. I only try it with refundable comp rates, and I see success about a 30% hit rate.

  7. I just saw a BREAKING NEWS story on CNN that said that Trump was considering signing a new Executive Order that says that if you book through an OTA ,you will not be able to connect your laptop to hotel wifi. They will only support phones and tablets. You heard it here first! 😉

  8. I used to always book my hotel stays on the Expedia website. I agree with the other person’s comment that the reward program of Expedia is worthless and NOT EASY to use. Last year I book a week stay for myself in a 5 star chain hotel in Budapest, I accidentally booked it without signing into my Expedia account, I found out upon my return from the trip. I called & emailed trying to get that corrected to credit my account, but they declined to do it, even though I booked & paid for it with my credit card. Worst yet, the chain didn’t want to give credit points for the stay because I didn’t directly with them. Same experience with my Hilton stays, NO points because I didn’t book thru Hilton direct and they couldn’t give better upgrade even for me as Gold member.

  9. Curious how corporate-forced sites are treated by the hotels (Concur etc.) — like OTA for rates and member benefits? So many of us are forced to use them.

  10. Gary, I’ve decide you are intentionally putting all these typos in your blog as a sort of Where’s Waldo treasure hunt kind of thing.

    “match consumes to the hotel they’ll most want to book”

  11. Also makes me wonder about cashback sites. I get points and status recognition, as it is booking onsite. But still commissioned. So am I getting a worse room?

  12. “generally corporate booking sites receive points and status credit”. That is true but the catch is “generally”. I always book through the hotel’s web site wherever possible. That way I know my benefits are guaranteed. On the rare occasion I have been denied a “Best Rate Guaranteed” claim for a totally spurious reason, and where the price difference has been not worth arguing about, I have emailed the hotel before I arrived telling the story, stressing my loyalty tot he chain and asking for a meaningful upgrade from the hotel. Has never failed!

  13. I’d be interested to see how individual hotel chains’ campaigns to get people to book direct are faring. Hilton has been especially aggressive with their “Stop Clicking Around” ad campaign, coupled with offering members-only rates that have at times been substantial discounts, and liberally awarding the Gold status as well as increasing the number of Diamond status match offers because “the proportion of spend captured from HH members increases as they move up the elite status levels within the program.”

  14. @DCS the members only rates as substantial discounts? that’s funny. OTA bookings are up and commission expense is up.

  15. @Gary — You just repeated the same blanket claim. What I said was that I would like to see the numbers for the individual chains, and contrary to what you seem to assert, I made no other claims other than AT TIMES members-only discounts have been substantial, and they have been. OTA bookings could be doing well overall, but it does not necessarily mean that they are siphoning equally from the individual chains.

  16. Thank you Jonathan. I missed the BREAKING NEWS today….. I was in a retreat. This new executive order from Trump is scary. I will continue to book directly.
    I can always count on other followers of this blog for the latest and most accurate information.
    🙂 🙂

  17. I have tried (and always failed) to use the hotels Best Rate Guarantee. They always have some BS reason why that particular room isn’t the same as the one you booked. A trick they love to do is use wildly divergent forex exchange rates to prove you are out of luck. Hyatt in particular has almost made an art form of crazy reasons.

    Frankly, I stopped using expedia. I cannot get them their ‘program’ to do hardly anything of value. The only one that I have had success at is hotels.com and their 10 stays paid, 1 stay free policy.

    I normally book using the hotels sites directly now, but I will compare weekly to see if it is cheaper.

  18. I’ve booked 4 or 5 trips, ( if I include side trips) and have had the best
    experiences using Expedia. Loyalty points mean nothing to me.
    On 2 international 10 day trips, my package which included air and hotel
    was cheaper than the airfare alone if I had booked it separately.
    Total price is always included and I can peruse hundreds of places to stay with pictures, amenities. locations, so simple. What’s not to like ?
    Customer service readily answers my calls and go out of their way to
    contact properties if I question something. Very good company.

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