Hotels are doing a better job in getting booked direct

January 23, 2007 - By Ben Abramson

Websites offer enticements such as low-price guarantees.

Ever-fickle Web users have a new tactic in their quest for online deals: Use an online travel agency such as Expedia or Travelocity to comparison shop, then go directly to a hotel chain's website to book a room.

So-called supplier sites, in this case hotel operators, have been the beneficiaries of this trend, dramatically growing their share of online travel business.

According to a survey by travel research firm PhoCusWright, the share of online shoppers who purchased directly from a branded hotel site climbed to 45% from 9% over the three years ended last year.

During that same period, the share who used an online travel agency site for a hotel stay declined to 51% from 70%. The same survey reveals that 55% of Web users who start their search on an online agency site end up making their purchase from another source.

What accounts for the surge in booking on branded hotel sites? PhoCusWright analyst Susan Steinbrink cites improved design and usability, stronger inventory control and more flexible cancellation policies as major factors that have lured online shoppers. She also credits a "dual-channel strategy" hotel call centers combined with an online presence as a big selling point for travelers. And, of course, the bottom line: "Supplier sites are doing a better job of pricing their inventory and doing so competitively."

Here are some of the latest features and deals offered by hotel websites :

Low-price guarantees
Most major hotel chains including Marriott, InterContinental, Hilton, Hyatt, Starwood, Choice and Cendant now offer a lowest-price guarantee for online bookings. Policies vary but, in most cases, if you find the same room for the same dates from another online vendor for less, the hotel chain will refund the difference plus a premium.

Cendant's offer stands out: If you find a better online rate for a Days Inn, Ramada or other applicable chain, the hotel will give you your first night free and match the competing price for the rest of your stay. Marriott will take the lower rate and discount it by an additional 25%. Hilton will match the lower rate and give you a $50 American Express gift check. To qualify for any of these offers, you must find the competing online deal within 24 hours of booking and provide proof to the hotel site.

Prepaid rates
Mirroring a strategy long employed by booking sites such as and Quikbook, many hotel chains now offer discounted rates for travelers who pay in advance. For an upcoming weeknight in October, a room at InterContinental's Mark Hopkins San Francisco comes in at $259 a night, but if you're willing to prepay, you can shave $30 off the nightly rate. At Starwood's W New York-The Court, you can save $20 off the "best available" rate of $379 by prepaying. Note that regular cancellation policies don't apply to prepaid reservations, and many are non-refundable.

Comparison shopping
Hoping to capitalize on consumer preference for comparison shopping, hotel sites have also made it easier to price different brands under the same corporate umbrella. Search for a room on the Starwood site, for example, and your return will include options ranging from the luxury St. Regis chain to the budget Sheraton Four Points. Marriott's multi brand search lets you compare, for instance, how much more you'll pay for a kitchen at one of its Residence Inns compared with a bedroom-only Courtyard property.

Loyalty programs
Hotel loyalty program members tend to be a brand's best customers. In general, program members accrue points based on how much they spend at a participating property and earn free stays or other rewards. Many hotel sites offer supplemental bonus points for booking specific dates or properties.

Members can also use acquired points for room upgrades or bonus features, such as massages or dining credits, or transfer points into airline mile accounts. Just as with airlines, members must use the hotel chain's site to book award travel; unlike the airlines, they tend to offer a wide range of available dates for such stays.

It's not just bonus points that keep such users coming back. Hotels have become more sophisticated about maintaining user profiles and using past purchasing behavior to promote deals, features that PhoCusWright's Steinbrink says "help drive loyalty buying and improve retention."

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