The annual HSMAI Digital Marketing Strategy Conference was held in New York, NY on February 17, 2016.
For those of you who attended, or did not attend the conference, my presentation, “Distribution Parity: Where Do We Go From Here?”, is available below. It features an update on recent worldwide parity developments (through December 2015) as well as some practical distribution contracting recommendations.
Free to contact me if you have any questions.
This year's HSMAI Lodging Chief Digital Officer Executive Roundtable was held on December 8, 2015 at Washington, D.C.
For those of you who attended, or did not attend the Roundtable, my presentation, "Distribution Parity: Where Do We Go From Here?", is available below. It features an overview of recent worldwide parity developments in the online distribution world.
Feel free to contact me if you have any questions.
The United Kingdom's Office of Fair Trading (OFT) issued a Statement of Objections this Tuesday alleging that industry giants Booking.com B.V., Expedia, Inc. and InterContinental Hotels Group violated the UK’s Competition Act of 1998. The Statement of Objections will not be made public, but from OFT’s comments, it’s rate parity and best rate guarantees that are causing the trouble.
Requiring on-line travel agents (OTAs) to honor a hotel supplier’s best rate guarantee (at retail) and requiring hoteliers to provide inventory to distributors at the same price across all distribution channels are as close to universal practice in this industry as I have seen. And now, OFT appears to consider them by a less salubrious name: price-fixing. However, the Statement of Objections is not “the final word." It is a sort of pre-trial opinion in which OFT provides official notice of a “proposed infringement [of the Competition Act 1998] decision” and the parties to the dispute may make written and oral arguments to be considered before final decision is rendered.
OFT’s statement was issued at the end of an investigation begun in 2010 after a complaint was made by Skoosh, a small British OTA. Skoosh contacted OFT after Skoosh’s own hotel suppliers demanded that Skoosh raise its retail rates to a certain figure (among other allegations). The hoteliers, of course, were apparently acting to meet pressure applied by Booking and Expedia not to violate what was almost certainly a contractually required rate parity obligation of some sort. In effect, Skoosh raised concerns with OFT that rate parity and best rate guarantees operate together to artificially fix prices in the marketplace and therefore act as a barrier to competition, particularly for new or smaller players, like Skoosh, who might be willing to undersell the larger OTAs to grow its business.
If OFT formally issues a finding of an infringement, despite its jurisdiction being limited to the UK, the finding will cause--at a minimum--a shift in the way a significant majority of the hospitality industry conducts its distribution business, as well as the amount of competition in the marketplace. The Internet, after all, is international. So please stay tuned!
By now, nearly every revenue manager, electronic distribution manager and sales and marketing manager is familiar with the significance of keywords and the need for brand owners to manage third parties’ use of keywords in search-based Internet marketing. Every negotiation of an online distribution agreement (whether direct-to-consumer, wholesale or otherwise) should include careful consideration about reasonable restrictions or conditions a hotelier will place on a distributor’s use of keywords.
As technology continues to evolve and to disrupt many traditional travel sales, marketing and distribution channels (Tnooz alone seems to report on new search-based tools weekly), owners and operators must reconsider their historical (and by now standard) approaches to critical contract provisions that address how and to what extent a distributor may use the hoteliers’ trademarks, trade names, logos and other intellectual property, including use as keywords. The recent and much publicized launch of Promoted Hotels by Google served as an important reminder of this fact.
Promoted Hotels is Google’s new search-based marketing tool that allows hoteliers, OTAs and anyone else interested in securing a preferred booking position over other channels to bid for the right to be the primary (and sometimes, sole) booking option in ads that appear at the top of the Google Hotel Finder search results. As you might expect, nearly all of the searches that I ran for hotels in various locations across the U.S. featured ads and links placed by OTAs and not the featured properties themselves. Does any of this sound familiar? Additional details regarding Promoted Hotels and sample search results can be found in these three articles.
Room Key, a brand new player in the on-line hospitality market, launched in beta on January 11, 2012 to some excitement and some hard questions. Room Key is a joint venture among six U.S.-based hotel chains—Choice Hotels International, Hilton Worldwide, Hyatt Hotels*, InterContinental Hotels, Marriott International* and Wyndham Hotel Group—that allows users to search for available rooms at almost all of the chains’ global properties, or about 23,000 rooms total. More Kayak than Expedia, users search the Room Key site for inventory and are then redirected to the individual property (or chain’s) home site to complete booking. The idea is to drive traffic to the hotel websites and away from on-line travel agencies (OTAs) like Expedia, Priceline, and Travelocity. And, of course, to provide a customized, personable hotel booking experience to the user--and who better to do that then a group of hoteliers--says CEO John Davis.
Fall is upon us and like every fall, there is no shortage of upcoming travel and tourism industry events to attend. Over the next few months, our team will be busy attending and speaking at a number of industry-related events.
Upcoming events include:
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.