LarryInNYC posted a story on Milepoint about a small hotel owner’s experiences working with Expedia.
The hotel owner reports:
- Expedia takes a 25% commission. I’m actually surprised it’s that low, I’ve heard of small independent hotels paying as much as 40% with commissions in the 20’s reserved for the big chains with negotiating clout.
- Expedia made several mistakes in describing the property and its rooms. The hotel kept asking Expedia to make updates and corrections, but the process was a mess and corrections didn’t get made properly. Guests were getting rooms that were different than what they thought they had booked as a result.
- Website links stopped working, the hotel no longer came up on Expedia, and the hotel owners couldn’t get Expedia to fix it while the problem got passed around between the travel website’s content and IT folks.
- The hotel got kicked off of Expedia for complaining too much. All future bookings were cancelled. The hotel remained listed on Expedia, just without any inventory, so anyone searching was led to believe that the hotel was sold out (when if they called they could get rooms).
If I assume here that the hotel owner was probably difficult to work with, that there are two sides to every story, and wade through the ‘big business is crushing the little guy’ and ‘Expedia is trying to hide inexpensive value hotels so consumers book more expensive properties’ (clearly false — Expedia wants to make the sale, and if they ‘hid value properties’ they would lose many sales to Orbitz, Travelocity etc). Then I think we can make a bit of sense of what’s going on here.
The online travel industry is in transition. Expedia was built on a bulk, self-service model. That’s true both of its interactions with customers as well as with individual hotels. It’s why it can be very difficult getting customer service out of Expedia or Orbitz or other online travel agencies.
The business model is to push through high volume with as little customer service cost as possible. They’ve squeezed out traditional travel agencies, and agents that remain are of the bespoke variety — offering real knowledge and connections for clients looking to customize their experiences and in a position to pay a premium for that level of service and experience.
For most of us, most of the time, that isn’t necessary. But the world of travel is complicated, and for the irregular traveler it’s highly confusing. Which is why we’re beginning to see online travel 2.0 — mass marketing, high volume, that uses technology to customize the experience and bring personally-relevant advice and content to the traveler. That’s what’s behind Orbitz making recommendations for more expensive hotels to Mac users (because on average they choose pricier accommodations than PC users) and behind Google’s travel plays as well, bringing the right information to the right consumers at the right time.
This space is very far from mature and it is very much not in the DNA of the original “OTAs” like Expedia, Orbitz, and Travelocity, as much as they might want it to be.
So as frustrating as it is for consumers to deal with those sites when things go wrong, so too is it frustrating for individual property owners to deal with them as well. The big chains have enough volume that they get attention. They have designated contacts who can fix problems. Marriott and Hyatt and Hilton and Starwood have huge quantities of rooms, and can get a response. An 18 room property is only important to Expedia as one of 1000 properties like it. Spending too much to service that property makes no sense for Expedia.
Place that property in Playa del Carmen, Mexico and you can imagine that the personalization and degree of connectedness to the heart of Expedia gets legions worse.
Enter the bureaucratic nightmare scenario, once Expedia cancelled forward bookings:
A few days later we were contacted by Expedia’s Collections department and told we owed an exorbitant amount of money for “relocation fees.” Here’s how it works normally: an Expedia partner hotel agrees that if it cancels an Expedia generated reservation because the hotel cannot accommodate a guest, Expedia will then book the guest into another hotel in the area and charge any difference in cost to the original hotel. … [Expedia] was then booking the guests (our guests… people who wanted to stay at our hotel) into other bigger, more expensive hotels and then having Expedia bill us the cost–costs sometimes as much as three times what our room rates were!
I do agree with the author’s advice that when booking a small, independent hotel you’re best off contacting the property directly to get the best deal. Even tell them you saw the hotel at Expedia but hoped they might have local specials if you booked directly. You give up your 2 Chase Ultimate Rewards points per dollar by not going through that shopping portal over to Travelocity, of course.
I can’t speak to any malice on the part of individual employees, and this is one hotel owner’s side of the story, but it’s entirely plausible (claims about motives notwithstanding) based on the overall state of online travel. If we don’t crush the coming innovation (as some OTAs have wanted the government to do), things will get better. Technology will improve. Expedia and others will get better and dealing with the large numbers of 18 room properties, just as they’ll get better at making bookings that stick, and offering the hotel room you actually want in the first place. Sadly we’ll have to deal with online booking 1.0 in the meantime.
This is the downside of not dealing with someone in your local area? will you in the future? doubtful….live n learn
I work at a Hilton family property and I can say Expedia offers no better service to the big chains, at least not ours. I’ve heard from many of my fellow hotels that have problems with them. One common problem: Expedia’s systems will not be able to book a room due to the hotel being sold out so they “book” the room anyway and fax over the reservation information. Guests end up getting walked and the hotel takes the blame.
Our corporate has now instituted a program where they pay for search engine ads and we get charged a commission every time you click the link thru to our website. The benefit is the commission is cheaper than Expedia’s with the goal being to pull all business from those sites.
@tony, Hilton does not offer cash back. Marriott, SPG, IHG and Radisson do. Please offer cash back via topcashback/fatwallet/bigcrumbs and you’ll see fewer ppl booking rooms at expedia/orbitx/travelocity.
If the small business owner doesn’t like the terms of the service, he should drop out and find other ways to advertise. Spend a like amount on Google Adwords or other mediums.
When you sell through a channel like Expedia or Orbitz, many small businesses think they have many, many customers. The reality is they just have one…the website…who can shut them off at any time. Who would set up a business predicated on one customer under a cancelable contract?
While it never pleases me to hear of small businesses suffering…they are an important part of the US economy…flawed business strategies deserve no sympathy.
Thanks for the peek behind-the-scenes. I never really thought about how the back-end works.