We begin this week’s Update with some good news on the direct booking front. Enjoy.
Hilton’s Direct Booking Efforts Enjoying Success
("Hilton maintains focus on direct relationships as growth outstrips agency channel," Phocuswright, February 15, 2019)
As part of its fourth quarter (2018) earnings call last week, Hilton shared some good news on the results of its ongoing direct booking efforts. According to Hilton CEO, Chris Nassetta, bookings on Hilton’s direct web channels grew this past year at a rate three times the rate achieved by third party online booking channels. According to Nassetta, Hilton’s direct channels (both offline and online) now represent approximately 75% of Hilton’s total business (approximately one half coming through web channels). Naysayers might ask at what cost are these improvements being achieved, particularly given Hilton’s heavy focus on loyalty program growth, which has been core part to Hilton’s direct booking efforts. Whether these many investments by Hilton (and Hilton owners) to establish longer-term (loyal) relationships with guests will pay long term dividends (which are sustainable through the next inevitable economic downturn) remains to be seen.
Expedia Gets Tough
('Expedia sues United in fight over ticket-distribution costs," Seattle Times - Business, February 6, 2019)
Although several sources reported late Friday that Expedia and United have agreed to temporarily suspend their court battle, Expedia’s willingness to pursue claims against United in the midst of contract negotiations is nonetheless interesting and, perhaps even, telling. Is the lawsuit a sign that Expedia is growing tired generally of travel suppliers’ threats to not renew (or even terminate) critical supplier agreements in efforts to obtain better contract terms? Or is the lawsuit simply a last ditch effort to ensure that a critical supplier continues to make good on its clear and unambiguous contractual commitment to provide the online booking platform critical travel products? Here’s what we know . . . According to the heavily redacted complaint (see attached) filed in the Federal District Court for the Southern District of New York, Expedia is seeking a declaration that United’s threatened withholding of flight data is a breach of the parties’ long-standing contract, an injunction prohibiting United from following through on its threatened action and damages in an amount to be proven at trial. The dispute centers around United’s plan to withhold flight information beginning in October, which Expedia alleges (and United apparently acknowledges) is the result of Expedia’s refusal last August to renegotiate key terms and conditions of the parties’ supplier agreement. According to Expedia, United has no contractual basis to withhold the information and by carrying through with the threat would harm thousands of Expedia customers. Whether the current stay remains in effect or the parties’ elect to re-engage in their New York jousting, we will continue to keep you updated.
The week’s Update features an update on one of the many pending EU and EU member states’ ongoing investigations into the practices of OTAs. Enjoy.
Danish Competition Authorities Weigh In
("Hotel-booking competition improving but users must be better-informed, Danish report says," MLex, February 1, 2019) (subscription required)
In a report released last week by the Danish competition authority, the regulator concluded that although competition among bookings channels has improved (allegedly as a result of the rate parity improvements associated with “narrow parity”), much education is still needed. According to the regulator, both consumers and smaller hotel companies need a far better understanding of OTAs’ revised terms and conditions and their effects. Going forward, the regulator will now focus on better educating hotel companies of the revised terms and conditions and informing consumers of OTAs’ standard sales practices (e.g., limited room availability). Separately, the Danish government has committed to working with the EU to require OTAs to better inform consumers of the OTAs’ preferential sort order and display practices.
This week’s Update features a heavy dose of Airbnb as it celebrates a milestone. Enjoy.
Lufthansa Partners with AI-Powered Predictive Platform
("Lufthansa invests alongside Hopper, plotting collaboration on artificial intelligence-led tools," Phocuswright, January 23, 2019)
The Canadian company, Hopper, has the been the subject of several previous Updates. The application-based booking platform, which uses predictive analytics to forecast airfares and room rates, announced last week a “multi-million dollar” partnership with European airline, Lufthansa. According to the two new partners, the benefits of the newly announced partnership include giving Lufthansa access to Hopper’s AI to identify traveler preferences and predict demand and providing Hopper a much needed entrance to the European market.
Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.