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Tim Peter

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March 15, 2016

Expedia’s Accelerator Program: A Wolf in Wolf’s Clothing (Travel Tuesday)

March 15, 2016 | By | No Comments

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Expedia's Accelerator Program: A Wolf in Wolf's Clothing

There’s an old joke about running across a guy who’s hitting himself in the head with a hammer. When asked why, the man replies, “Because it feels so good when I stop.”

Which is exactly what comes to mind when hearing about hotels choosing the new Expedia Accelerator program. After years of hard work to successfully negotiate lower margins with the travel giant, some hotels apparently are signing up for Expedia’s new program. In exchange for providing increased margin to Expedia — which the company “graciously” caps at 15% on top of your existing margin — your hotel can improve its placement in Expedia’s search results.

Except for a couple of small wrinkles.

  1. Your competition can improve their placement by increasing their margin too. So, sure, you can bid yourself up a bit, unless your competition does too, in which case, nobody wins (except Expedia). Really, this is “Celebrity Death Match” (or perhaps, “Profit Death Match”) with hotels competing against one another to drive down their profits. Sounds like we’ll all be running a race to zero if Expedia has their way.
  2. There’s no guarantee of your placement. As Tnooz states, “Expedia was eager to point out that a hotel cannot buy a premium spot. They must have earned it, which is something that should assure consumer confidence in the quality of the search rankings.” If that’s the case, why does it make sense to bid up your commission for limited return?

The only thing Expedia’s program actually accelerates is the level of commissions you end up paying them.

While bidding is capped at a maximum of 15%, you’ve got to remember that this is in addition your existing commission. If you’re paying 18% today, you’d be looking at up to 33% total commission. If you’re paying 25%, then that’s up to 40% going to Expedia under the Accelerator program. At those levels, it seems you’d be much better off investing in driving more direct business instead of handing away your customer to Expedia.

Now, I’ve never been one of the “torches and pitchforks” crowd, calling for an uprising against the OTA’s or “going to the mattresses,” engaged in all out war. As anyone who’s ever watched “The Godfather” or “Game of Thrones” can tell you, those don’t always work out so well for most of the involved parties. Instead, I’ve argued for a “fair and balanced” approach to your OTA relationships, using OTA’s where necessary to reach guests and fill rooms you can’t on your own.

And I get that it can be hard for independent hotels to extend their reach and find new guests. And, yes, Expedia, Booking.com, TripAdvisor and the like can play an important role in finding and attracting new guests — it’s why I’ve consistently argued in favor of working with OTA’s, not against them. But once you start talking about paying 25% or more to reach those guests, you’ve got plenty of better options. Search and social and mobile and your existing guest database all play a powerful role for reaching guests, driving revenue, and increasing occupancy and RevPAR. They really work. And, the best part is, they create a deeper connection between you and your guests that you can build on for even longer-term success.

So, what do you say? Won’t it feel good to set the hammer down and stop hitting ourselves? If you’re looking to accelerate something, make it how quickly you can reduce your dependency on Expedia instead.

If you’re looking to learn even more about how changing guest behavior shapes hospitality marketing, e-commerce, and distribution, be sure an register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also want to take a moment to review the slides from my recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

If you’re looking to learn even more about how changing guest behavior shapes hospitality marketing, e-commerce, and distribution, be sure an register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

You might also want to take a moment to review the slides from my recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:

Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:

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