HOTELMARKETING.COM

Hotels tighten control of online inventory

April 12, 2004 |

After haphazardly building an Internet sales pipeline, the lodging industry sprang a $1 billion leak -- and major hotel chains are now aggressively working to plug the hole.

The problem began when hotel franchisees signed deals that were too favorable to popular travel Web sites, which account for the majority of all rooms booked online, and sold rooms at rates that drained the big hotel companies’ profits. But with the dot-com seduction over, the chains are much tougher negotiators, said Bruce Wolff, senior vice president of distribution and sales at Marriott International Inc., the world’s largest lodging company.

“We have no problem with them making money,” Wolff said of the travel Web sites during an interview at the company’s Bethesda headquarters. “But we needed business terms that were a little better than existed.”

Using a combination of financial carrots and sticks, Marriott and other chains are also beginning to drive a greater percentage of online shoppers to their own Web sites, a migration that lowers the hotels’ distribution costs significantly.

Consumers should get the same rates at hotel-owned sites, although they won’t find the comparison shopping tools available at sites including Expedia, Hotels.com, Orbitz and SideStep. Those sites believe such tools will make them more competitive.

“Supplier sites are good for loyal customers,” said Kurt Weinsheimer, a vice president at the hotel division of Orbitz. “But the vast majority of consumers want the capability to shop multiple brands.”

The hotel chains’ current revenue leakage, as the industry refers to it, stems from the fragmented way in which they began doing business with third-party sites in the late 1990s.

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