In the middle of September this month, Expedia announced a strategic alliance where Thomas Cook would consumers would get access to Expedia’s 60.000 hotels which will be bookable on the Thomas Cook site, as part of a package holiday. What impact will this have on hotels?
That Expedia makes these kinds of strategic alliances is not so much a surprise and will certainly be one of many similar announcements. For a big player such as Expedia to grow, they need to look at new markets and Touroperators such as Thomas Cook are a natural part of their growth. This is also one of the reasons why Expedia has been pressing hard to increase the Packaged Rate Commission from an extra five to ten.
As usual, hotels need to look into the impact it will have on their business and acquisition costs. Over time they will probably see a huge impact on their, more expensive, Expedia Packaged Rates. This does not only come from the Expedia marketing campaigns but also from the fact that these kinds of rates are sold to a broader network, including Touroperators.
So, what can hotels do with this information? As usual; it is vital to understand how your rates are distributed and who gets access to them. Do the math; what is your Packaged commission rate and which cheaper channels can be used instead? It might even be a Touroperator offering commissionable BAR-rates. Now, I am not saying that these are your very best option, but Expedias packaged commission, for most hotels, is amongst the highest and are distributed in the same Touroperator market.
What to do?
- Ensure you increase your distribution platform and make yourself less dependent on just the biggest OTA-players.
- Make sure you have an excellent booking engine and drive Direct Revenue. This is an easier task then a few years ago with the coming of web- and booking engine providers that understand the hotel industry and enable hotels to get a good website and excellent booking engine for a reasonable price.
- Check out your possibility to work with the Metasearch Sites. There are a number of agencies that can help you with that and it can drive direct revenue. If you are unsure; ask us.
- Always keep track on your lowest net rate as, with an increased cooperation between the various distribution channels, more and more business is directed in that direction.
- Proceed to work pro-actively and react on what happens in the market.
Remember; those adapted to change are those that will win in the end!