Say no to “lowest rate guarantees”

June 30, 2005 |

Let's get back to selling rooms by value and better service and stop selling rooms by rate. The Internet was never meant to be a bargain basement.

by Neil Salerno

C’mon people…do we really need to chronicle and perpetuate the war between hotel supplier and online travel agent sites? The fact is that travel agent booking portals are not going away anytime soon. Franchises…learn to live with that.

It seems that more and more people are reporting on and/or choosing sides on this issue. The online war between hotel direct suppliers and online travel agents appears to stimulate many people inside and outside the hotel industry. Every day, more and more articles are appearing with a body-count of numbers with first one, then the other taking the lead in the battle for the Internet. Both supplier-side and online travel agent bookings will be here for quite some time, no matter who is ahead at any one time.

The way I see it, both hotels and online travel agents are doing a great job. Anything that promotes travel is a “good thing”. This battle has made both sides stronger. Competition stimulates innovation. The battle caused hotel franchises to improve their site navigation and booking engines; online travel agents sites have improved. Does it really matter who is ahead of the other at any particular moment in time? We need them both. Why would anyone want to destroy a partner which is developing business for hotels they represent?

Independent properties need online travel agents to remain competitive with bigger box franchise competition. Franchised hotels need online travel agent production to maximize their exposure in the marketplace. Online travel booking portals are still more prominent in destination searches. Want to give that up? The fact is that online travel agents are providing marketplace exposure to all hotels which would otherwise be financially unattainable to most of them.

When the major franchises learn how to work with online travel agents, instead of battling them, perhaps we will make real progress. Working through intimidation and threats seems like a poor way to gain co-operation; yet some franchises have resorted to imposing unrealistic rules on online agents. I wish more franchises would recognize that we need both of them to be successful. Is this meant to limit their success? There is no evil empire which needs to be defeated.

The Internet and resulting online travel agents are providing independent hotels with the ability to be competitive with franchise hotels for the first time in the world-wide marketplace. What’s wrong with competition?

During the advent of the Global Distribution System, hotel franchises embraced its new technology. Hotels of all kinds welcomed the GDS, eager to get their share of new travel agent and airline generated room business. The GDS thrived for many years and is still strong today. Of course the franchises were quick to have all their franchisees register the GDS through the franchise.

Today’s new breed of travel agents, online and offline, will survive for many years to come. Many travelers are still sensitive to the unique relationship they can develop with their “travel expert”. There will always be a place for their expertise and assistance to the traveling public. Recent data seems to indicate that many travelers enjoy the convenience of using online travel agents (third-party aggregators) to book air, car, and hotel at one site.

One day, the use of online travel agents, direct hotel suppliers, and GDS suppliers will stabilize. The primary winner will be the provider which is able to serve travelers in the best possible way. Let’s do away with the “lowest rate guaranteed” nonsense. It’s just not fair to franchisees who are trying to improve their average rates because it affects all their rates. It’s a poor way to sell anything.

Let’s get back to selling rooms by value and better service and stop selling rooms by rate. The Internet was never meant to be a bargain basement. A summit meeting between hotel franchises and online travel giants could result enough synergy to help the entire industry.

Neil Salerno can be contacted at Hotel Marketing Coach