Hotel chains want you to book directly through them because it costs them less to make a reservation themselves than it does to pay a commission to Expedia or other online travel sites (or travel agents).
A dozen years ago hotel chains started to focus on driving their most frequent consumers to their websites by limiting points-earning to reservations made directly, limiting elite stay-earning, and in some cases even limiting points. While individual hotel treatment may vary:
- Major chains do not offer points-earning on room rates booked through many third party channels.
- Major chains do not offer elite qualifying nights for these third party bookings.
- Starwood, Hilton, and IHG exclude members from receiving elite benefits on such stays.
For both a chain’s best customers and for infrequent guests, they also had to make consumers believe they’d be able to get the best deal by booking direct. That’s why chains offered ‘Best Rate Guarantees’ though those are so fraught with fine print and gotchas that they’re more marketing spin than offer that most consumers are able to benefit from. (Which isn’t to say they aren’t really, really value for those who learn to play the game.)
The latest effort in the ongoing battle to reduce distribution cost is the discount for booking direct.
Hilton managed to negotiate deals with the major online travel agency sites that no longer require the chain to give third parties “rate parity” — in other words, they can sell rooms for less on their own website. (Arguably they could have offered these ‘member-only rates’ even before that.)
So in the fall Hilton tested a small discount in a handful of cities restricted to Hilton HHonors members. The discount wasn’t great, about 5% (and so generally more expensive than AAA rates), but it was more about the model than the amount. Then in February Hilton expanded the discount offer worldwide and is promoting the idea that guests should “stop clicking around” and book at Hilton.com.
Here’s what happens when you ‘book direct’ with Hilton:
Hilton’s commercials tell you that booking direct is so alluring!
Marriott matched Hilton last month with member discounts promoting the idea that you’ll pay less booking direct with the chain than through an online travel agency. But the discounts are generally just 2% – 5% so less than what a AAA discount will get you. (I pay for my AAA membership and get good value out of AAA rates, but many people book the rates without even being a member.)
Today Hyatt introduced member-only discount rates and in some cases they’re bigger discounts than what Hilton and Marriott are offering, but still not better than AAA rates. And they’re not available worldwide.
Today, Hyatt Hotels Corporation (NYSE: H) announces the launch of an exclusive discount for Hyatt Gold Passport members, rewarding loyal guests with an up-to-10-percent discount for bookings made through Hyatt.com or the Hyatt mobile app.
The Hyatt Gold Passport member discount, available beginning today at Hyatt hotels in the U.S., Canada and Australia, strengthens the value for travelers who book directly with Hyatt and builds guest engagement.
Park Hyatt Abu Dhabi
Here are the two key things to know about Hyatt’s new effort:
- Hyatt’s member discounts will be ‘up to 10%’ so potentially better than the 2% – 5% we mostly see with Marriott and Hilton. But they may not be better, since the amount of the discount is determined by each individual hotel.
- The member discount will be available only in the U.S., Canada, and Australia. I had hoped this would be worldwide, because most international Hyatts don’t offer a AAA discount. AAA usually gets you 10% off, these discounts are useless when they don’t match AAA or aren’t available where AAA isn’t.
The first rate I pulled up was a month from now at the Hyatt Regency Austin. The ‘member discount’ was 5% off of the ‘standard rate’ (formerly known as Hyatt Daily Rate and also known as Best Available Rate or BAR). It’s the same as the advance purchase rate, but cancellable. The AAA rate, though, was 10% off and cancellable.
At the Park Hyatt Melbourne, where there’s no AAA rate and the member discount is 10%, this will be useful to members without corporate discounts. (Hyatt had been testing a 15% member discount in Australia that ended March 31.)
The other piece of Hyatt’s announcement is that:
later this year, the enhanced Hyatt mobile app will provide guests who book direct the ability to make on-demand requests by communicating instantly with Hyatt on services like Messenger or text messaging.
Online travel sites are useful as one-stop shops to compare options for consumers who don’t know up front which hotel they want to book. Their technology is at least marginally better than that of the major chains. They compete to show consumers what they want as quickly as possible. So they provide a better booking experience.
Telling consumers that they’re going to pay more for that better booking experience is only one piece of the puzzle. The other important piece is to give consumers the booking experience to help them find the right hotel for them, at the right price.
Gold Passport Diamond Room Service Breakfast at the Andaz 5th Avenue
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 get them a small piece of the way there. But 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.
Uh… how is this any different from a less generous My Elite Rate, and why won’t it run into the same problems as that program did?
@Gary claims: “Hyatt Introduces Bigger Members-Only Discount Than Hilton…”
You should first have checked your info on other chains’ booking discounts because the claim is patently false. Hilton’s HHonors Discount rate is 10% flat; it is worldwide; and it is property-independent, which makes it infinitely better than Hyatt’s Johnny-Come-Lately-hotels-decide elite-only booking “discount.”
I just stayed 4 nights at Hilton Prague Old Town and the discount was 10%. Then on the way back, I stopped in FRA and spent one night at Hilton Frankfurt City Centre and my HHonors booking discount was also 10%. I am spending a week at Hilton Singapore in about two weeks and just checked the Honors Discount rate: 10%.
Like I said: 10% flat, worldwide, independent of property.
@DCS you do not know what 10% flat means if you think that is what Hilton is offering.
@Gary — Yet another contentiously meaningless statement when all you can do is to find a counter example where Hilton HHonors Discount rate is less than 10%. I just gave you 3 locations, 2 in Europe and 1 in Asia that currently offer 10%, which already challenge your claim that Hilton’s members-only booking discount is 5%. You can check out the examples I gave to make sure, or you can find your own cases that offer less than 10%. Short of that, we know who has a hard time understanding what a 10% discount means.
In fact, I just booked a stay at Conrad Hong Kong that is offering 20% off (APR), which makes a premium room cost less than the BAR for a standard room! So, rather than booking a standard room, I booked a premium room at 20% off (APR), which would force them to upgrade to me to a suite because that would be the next best room upgrade [this was not necessary at this property where I have never failed to be upgraded to a suite but I also needed to get some base points toward requalifying my Diamond status and generate goodwill for when I will return there on a reward stay at the end of the year]. That is really the value of these members-only discounts for me. They can decrease the rates for premium rooms so much [to about BAR or less] that booking oremium room at a discount almost ensures me an upgrade to a suite, as just happened at Hilton Prague Old Town and at Hilton Frankfurt. Both hotels wanted to do the usual song and dance and claim that they “upgraded” me to a premium room on the exec floor. But I just quietly pointed out to them that I’d booked a discounted premium room (I had my smartphone app ready to show that I’d in fact booked a premium discounted room) and sure enough I was upgraded to a suite (they knew I was aware of how the game is played). In Prague, something funny in fact happened. After telling me that no suites were available and I showed that I’d booked a discounted premium so that the upgrade she claimed to give me was not much of an upgrade, the lady who was checking me in then said that she’d just found a junior suite on the 4th floor (not on the exec floor, which was the 9th floor) that she could check me into. I accepted, except that before she put me into it, the other agent had snatched it for a guy who was checking in at the same time as me. Now more serious about seeing whether any suites were available, she told me she’d look some more and lo and behold, a just renovated FULL suite turned up on the exec floor! That’s how you play the game will a full deck.
Let me know when you find a property offered HHonors Discount rate (HDR) that is less than 10%.
G’day!
“That’s how you play the game WITH a full deck.”
First hotel I pulled up, first set of dates. Hilton JFK. Discount = 2%.
I just played host to a visiting scientist for the past several days or I would have batted this one out of the park already…
Anyway, Hilton JFK if offering 2% and Hilton Singapore, Frankfurt, Prague, etc, are offering 10%. Which is likely to be a rip off?
But it is a bit late, ain’t it? The claim was that Hilton offers UP TO 5%, except that 10% is the NORM ( so you lost already) and if some Hilton is offering 2%, it is the exception that confirms the rule!
(The silence here tells me that most checked things out on their own and found out that I was right).
So, echec et mat!
@DCS let’s take your first example, Hilton Singapore.
The HHonors discount on the flexible rate is 3%, and the HHonors discount on the advance purchase rate is 2%.
Perhaps you’re making the mistake of comparing the HHonors Advance Purchase discount to the Flexible rate instead of the Advance Purchase rate, i.e. comparing like-to-like?
@Gary — Woah! This is a case where each of us is “right”! I just checked it and you are right the discount is 3% NOW at Hilton Singapore. However, when I wrote about it it WAS 10%, comparing oranges and oranges, for those 3 locations that I had pointed out. What this means is that the 10% was for a limited time only… (or maybe it was a “mistake rate” and my writing about it here made them realize that they’d offered more than they wanted to and changed it in a hurry! 😉 ) If you allowed users to post pictures, I am sure I would have posted a screen capture at the time.
@DCS actually you can post pictures, the photo just needs to be online somewhere and then embed the HTML.
Each of us isn’t right. The discount isn’t 10%. You claim it was before but I don’t think even Hilton ever claimed that it could be. (Actually I know that they did not)
Nonetheless since claiming we’re both right is the closest I’ve ever seen you come to admitting your wrong, I will graciously accept your characterization and end the discussion there! 😉
@Gary — How generous of you, especially since you are known as one who readily admits to being wrong! It’s tough to prove a negative, especially AFTER the fact, but now that I know that I can “post” pictures I will be sure to back up a claim like I made (10% discount), so that I would not be called a liar for something I saw with my own eyes at three separate locations.