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The End of Hotel Rate Parity: Much Ado About Nothing

The End of Hotel Rate Parity: Much Ado About Nothing

  Over the past few months, there has been a lot of talk about the imminent “end of hotel rate parity” and what it means for the hotel industry. Rulings in favor of ending rate parity clauses have been handed down by regulatory bodies in France, UK, Sweden and Italy. (Rate parity is the practice of maintaining consistent rates for the same product in all online distribution channels—Expedia, Priceline, etc.—regardless of what commission the OTA makes.) The reactions to a scenario in which rate parity will not be required or enforced have ranged from “OMG! This is the greatest thing ever!” to “This will destroy the OTA’s!” to the proverbial “Meh.” Some industry veterans have declared it to be a “revolution” or – even worse – have employed one of my least favorite phrases in the English language – “game changer.” I recommend putting jubilation on hold if you’re anticipating the quick death of OTA’s and the beginning of a new era of tremendous profitability for hotels. Some may believe that that the duopoly of Expedia Inc. and Priceline Inc. were built on the simple and magical hotel rate parity clause, and that they will perish without it. In response, I’d like to offer a gentle reminder: The market cap of these companies as I wrote this article today: Expedia Inc. – $15.87 billion Priceline Inc. – $66.49 billion (Source: Yahoo Finance) The Myth of Hotel Rate Parity as an Obstacle to Profitability Rate parity agreements put in place by OTA’s were never fully implemented by independent hotels. The complex distribution structure of an independent hotel operating in the real world made it impossible. Brand hotels have probably done a better job at implementing rate parity across their thousands of... read more
Your Marketing Focus Must Shift To Hotel Value Over Price

Your Marketing Focus Must Shift To Hotel Value Over Price

It’s amazing how much time and energy gets poured into deciding the price of a hotel room. There are STR reports, RMS Reports, and booking engine reports to go along with the hundreds of tools that are solely focused on how much you are charging for your room. There are stacks of reports on top of other reports all showing pricing data – past, present and future. You want to know anything to do with pricing? There’s a report for that. Now, where is the value report? You see, selecting your competition based on the size of your bed and the bathroom sink is an idea that has passed it’s prime. Boutique hotels (a term that needs to be retired) took a lot of time defining their hotels and restaurants as being truly different and holding certain value that a braded cookie cutter hotel is never going to match up to. Taking the time to educate your guests can make all the difference in value perception. Better perception = Better Price = Better Profits. A lot of the traditional boutique hotels under pressure from stakeholders over the years have descended on the price level competition. When your biggest USP is your price, then it’s all that you will be judged on. A room rate becomes your only significant value. Pricing is an extremely shortsighted play. Anyone looking for long term profitability needs to look at the value that they are providing to their guests. Here is how you can start to turn your team’s focus on highlighting your value versus going into price wars that hurt long-term profitability: Don’t Make Up Value-... read more
The Free Website Trap: Lessons From Priceline’s Rebranding of Buuteeq

The Free Website Trap: Lessons From Priceline’s Rebranding of Buuteeq

  Last year, Priceline.com made a splash when it acquired Buuteeq, a digital marketing and website “cloud-based system” for independent hotels, for what looks like $98 million. My detailed analysis of that purchase made a lot of headlines, and also missed a lot of headlines when some of the top hotel news websites did not carry my article. (Buuteeq was a big advertiser for them.) Last week, Priceline announced that it would no longer let Buuteeq operate as an independent brand, and that they now offer free websites in exchange for a 10% commission on every dollar generated on those sites. Here is my analysis of what this means for the lodging industry. Goodbye, Buuteeq. The first thing I observed is how quickly Priceline moved away from letting Buuteeq “continue to operate as an independent business within The Priceline Group.” I was highly skeptical about them being allowed to operate independently when I first wrote about the acquisition in August 2014 (read my conclusion section here). Thousands of independent hotels and B&Bs using the Buuteeq platform were given a “nothing is going to change” story by the founders. Here is an excerpt from an email that one of the founders of Buuteeq (Brian Saab) sent to a bed and breakfast client: “We remain an independent brand (one of the prime reasons we considered the merger with Priceline Group) and we continue to run business as usual. That said, I am thrilled to be able to rub shoulders with other brands in the group; we’re already getting great advice on how to improve conversion for hoteliers (who wouldn’t want to get best practices from the likes of Priceline, Kayak,... read more
Google’s Mobile Update: Keep Calm and Get With the Program

Google’s Mobile Update: Keep Calm and Get With the Program

Every time Google issues an update, hotel marketing agencies have a field day writing articles and trying to give you a reason to panic about your online presence. To provide you with a respite from the hyperbole, I would like to assure you that: Everything is going to be okay. This update is actually a great opportunity for you to take your online presence to the next level. Here are my answers to some of your burning questions about the Google Mobile Update of 2015. Why is Google doing this update? Good question. The simple answer is: Google wants to make more money. (Just for reference, this is always the reason Google does anything.) Google is at the forefront of mobile web. They have seen mobile search surge past desktop usage over the past several years. Their significant investment and success with the Android ecosystem further cements the fact that Google plays to win. In its continued dominance of global search traffic, Google has a clear agenda: to provide its users with the best possible search experience so that they stay loyal to Google. More Google searches means more chances for users to click on Google Ads, which means more AdWords revenue for Google. With the majority of web traffic shifting to mobile over the past decade, Google needs to ensure that the websites providing the best mobile experience get top placement in their mobile searches. Think of it as Google’s Spring Cleaning for Mobile Search, where they want to “incentivize” you to have a better mobile presence. Instead of wringing your hands, consider that Google is doing you a favor by reminding you to bring your mobile presence up to par. Complying with... read more
Let’s Keep It Real: The Truth About Hotel Meta Search

Let’s Keep It Real: The Truth About Hotel Meta Search

  Hotel marketing types love trends. Every day there is the same old story about a new thing that changes everything. It’s always a thing that, if the hotels would only start doing it, or hire an agency to do it, or subscribe to a tool that would do it… the heavens would open and it would rain revenue. I’m sure everyone remembers (if they are not still living in) the Social Media Monetization Era. Now, the new craze is Hotel Meta Search. Unfortunately, over the past few years, its virtues have been overstated, to say the least. Yes, it’s a channel worth trying. But no, it’s not a magical weapon that will transform your online revenue and put the OTAs out of business. (Magical weapons do exist, but only in online role pay games or Peter Jackson trilogies.) If you want to get in on hotel meta search, first you need to understand it. Don’t get your information from the vendor who’s trying to sell it to you. Here’s the truth about hotel meta search, and how you should use it. I’ll start by debunking some sales-fueled propaganda. It’s Not Ground-Breaking Hotel Technology Connecting your booking engine to Google Hotel Finder or TripAdvisor is not, in any way, shape or form, “ground-breaking technology.” OTAs have been doing this for years, and making plenty of money. The new development is this: Some hotel marketing agencies have developed an interface between advertising platforms (Google Hotel Finder, TripAdvisor, etc.) and a hotel’s IBE/CRS (Internet Booking Engine/Central Reservation System); and now they want a nice return on their investment. By making meta search sound like an interstellar technological breakthrough, they hope to get hotels to sign up en masse and pay... read more
Expedia Acquisitions Signal Tougher Times Ahead for Hotels

Expedia Acquisitions Signal Tougher Times Ahead for Hotels

Expedia, Travelocity and Orbitz walk into a bar.  “We do not serve second and third rate Online Travel Agents here,” says the bartender. “Well, they are now with me,” answers Expedia, “and the drinks are on me!” The room erupts with joy. Drinks are flowing. When Expedia bought out Orbitz within a few weeks of gobbling up Travelocity, it was great news for a lot of stakeholders. But it’s probably not so great for the hotel industry, which relies heavily on online travel agents (OTA’s) for their revenue and profits. Read on before you raise your glass. First, A Trip Down Memory Lane One of Expedia’s greatest assets was its first batch of market managers and directors. While Travelocity, Priceline (before booking.com) and Orbitz fumbled, Expedia built strong relationships with hotels and hotel personnel. Aggressive but likable market managers went out in person and made one exclusive deal at a time, pushing its competitors onto the sidelines. Fast forward to 2015: Expedia acquires the remaining (and still flailing) OTA’s. Meanwhile, Priceline acquires Booking.com, a miracle move that puts Priceline in its own league of awesomeness. It’s shaping up to be a showdown of epic proportions. Why This Is Bad News for Hotels and Travelers Travelers, hotel brands and hotel operators all have good reason to fear this sort of consolidation in the OTA market. Let me explain why. Higher Costs for Hotels Orbitz and Travelocity lost out to leaders Expedia and Priceline a while back. Still, they had their market share and their contracts in place with hotel suppliers. With this latest consolidation, the option of selling your rooms on a different channel is gone. Your new “Expe-Orbit-Ocity” contract now will contain much... read more

About Words of Vikram


Optimizing hotel and travel asset revenues is what I like to do most. Throughout my 15-year career, I have spent my time identifying clients' online revenue problems and then solving them.

This website -- Words of Vikram -- is where I share my stories, perspectives, and thoughts about the industry. It's also a place where I can make powerful, real-world advice accessible to anyone who cares to listen. I hope that my articles will challenge you to think about what you’re doing, and inspire you to aim higher.

Please bring an open mind and a saltshaker filled with many grains. I’ll try to keep it interesting.

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