Last week I used a couple of web based hotel booking sites to reserve some accommodation in Charlotte and Kentucky for an upcoming trip. One of them, Hotwire, offers a variety of star rated lodging where you do not actually know exactly […]which property you are staying at until pre-payment is made in full.
The advantage to the hotel is that they can hopefully dispose of unsold inventory, albeit at a lower than rack rate, a sales model known as ‘opaque’ and the guest benefits by getting a superior room at a discounted price.
As an exercise I used the same site to look at applying it to hotels on Barbados and was surprised to see a whole range of accommodation options from as little at US$64 including all taxes per night room only and as little as US$242 all-inclusive for two persons.
Hotwire makes their profit from a percentage, which I am told is between 20 and 25 per cent of the transaction amount. It at least partially dispels the largely held myth that we are always an overly expensive destination, when comparing lodging choices. Hotwire is an operating company of Expedia who also controls hotels.com and was originally launched in 2000 by four individuals and six major airlines. In 2003 it was acquired by IAC/InterActiveCorp for US$663 million.
Clearly they appear to be quite good at what they do, having won the accolade of J.D. Power and Associates ‘Highest in Customer Satisfaction for Independent Web Sites’ award for three consecutive years, 2007, 2008 and 2009. Booking hotels and in fact just about any element of travel like car hire and airline tickets has become something of a minefield and perhaps explains why so many people are attracted to the all-inclusive concept.
When I booked a car, the price varied for the same week and identical vehicle by almost 100 per cent. In the end the lowest rate was by selecting one of the biggest brands with the added advantage of a privileged check-in and drop-off, which at a major US airport, can save a lot of time.
The question to be asked perhaps is what fiscal difference would it make to the average hotel or tourism partner if they were able to reduce some of the dependency on these booking sites and increase the level of direct, rack rate bookings?
At least some hotels promise the lowest obtainable rate can only be obtained directly on their own website, but I have not always found this to be factual. A simple example is with Hilton bookings where the most inexpensive price needs advance payment in full for a non-changeable date and is non-refundable.
But the same rate can be obtained on some airline websites at an identical price but with a bonus of additional frequency flyer miles, therefore making it technically cheaper or more rewarding.
As technology and market reach dramatically improve, many more options are going to present themselves over the coming years and it will be even more critical to be at the lead of these changes if we are going to remain competitive as a destination.