31 October 2012
New Expedia Traveler Preference Program: What owners should know about the potential negative impact to their bottom line
It is so true that the devil is in the details. Take for example, the new “Expedia Traveler Preference Program.” It seems straightforward on the surface. The new program from Expedia lets guests pay the hotel directly at checkout, rather than to Expedia at the time of booking. This is a positive option for US hotels that would like to attract more European guests through Expedia as these guests prefer to pay the hotel at checkout rather than at the time of booking–six months before their vacation.
A negative impact of up to $2.1 billion in hotel values
Seems like a simple enough change, approved … roll it out …. But wait! What are the financial implications for hotel owners of this rather straightforward guest oriented program? Expedia handles 5% of all US hotel Rooms Revenue, so maybe we should look a little closer. Peeling back a few layers of this seemingly benign change in process could have a negative impact on US hotel ownership to the tune of $2.1 billion in real estate value unless concessions by Expedia, brands and managers occur!
Hotel owners get stuck with the increased costs
The issue is not that Expedia is allowing guests to pay the hotel directly; rather the controversy revolves around the fact that the new model increases the cost to a hotel to acquire the same business and that the entire burden of this added cost falls on ownership, while Expedia and the hotel brands and management companies (the two constituents that negotiated the agreement) benefit from the change.
