Hotel chains are luring clients away from intermediaries like travel agents and into direct channels by developing new product and loyalty offerings that exclude bookings made by travel agents.
World Tourism Network (WTN) Chairman Juergen Steinmetz published a statement on behalf of the WTN advocacy committee on eTurbo News, criticising hotel groups for limiting travellers’ abilities to earn loyalty points and benefits when their bookings are made through third-party providers, saying that the practice discourages the use of travel agents, tour operators and TMCs.
Several airlines are also currently trying hard to use similar tactics to lure agents’ customers away and into their direct channels. But the methodology has already backfired on at least one of them.
Otto de Vries, Asata CEO and Executive Director of WTAAA, raises the topic of American Airlines’ manipulation of loyalty benefits to drive NDC and direct bookings. The severe aftermath is a good example of how these methods can go wrong.
“I think that is a great case study to show how it is disenfranchising a very important channel and those customers. First and foremost, AA realised it was a bad idea and reversed it. And I think we need to comment on that because, at the end of the day, this is incredibly short-sighted and does not fully respect the customer’s choice of channel of booking,” says De Vries.
“In many cases, certainly when it comes to corporates, they do not have a choice but to use the TMC that has been appointed by their company to fulfil their travel bookings.”
De Vries points out that when it comes to bookings made through agents and TMCs for business travellers, it is part of a corporate requirement from their employers. Leisure travellers tend to rely on intermediaries for more complex bookings with multiple products and services.
“To deny a loyal customer of a hotel chain the opportunity to get the points because they have chosen to book it through a third-party channel, I think is very disingenuous, short-sighted and doesn’t fully understand why and how the customers are making the choices that they’re making. It really shouldn’t matter through which channel the booking is done,” says De Vries.
While this may not be occurring on a large scale in South Africa yet, De Vries notes that the potential implications of such practices should not be underestimated.
In his article, Steinmetz claimed that hotel groups, including Marriott, Hilton, Wyndham and Accor, did not offer points to their loyalty members booking via third parties such as travel agents, tour operators, TMCs and event organisers. He claims this is a bullying tactic that is used to drive travellers towards direct bookings.
Marriott had gone a step further by developing a reservation programme for business customers who book directly, bypassing travel and event planners, said Steinmetz. Hyatt Tampa informed eTurbo News that business travellers attending events and booking accommodation through the event organiser in certain Hyatt hotels, did not earn status benefits or hotel points.
The reason hotels are employing these tactics is to reduce the cost of intermediary distribution fees and commissions, says an article in Skift on August 22. The hotel groups split the savings they make with the client, by offering the best available rates exclusively through their direct channels.
In another tactic, hotels are adopting techniques where they provide more interesting offers through their direct channels, including attribute-based booking and highly personalised experiences. According to Skift, hotel chains such as IHG, Marriott and Hilton are testing new pricing and booking processes where travellers can pick which room they want based on specific attributes, such as on a preferred floor, with a preferred bed-size. Earlier this year, IHG rolled out a fully fledged function offering this attribute-based booking process for direct business on its mobile app.
Steinmetz emphasises that these practices force independent, small and medium-sized agencies to compromise by offering discounts to compete with these direct booking rates.
According to a Marriott Bonvoy forum on FlyerTalk, some travel agencies may offer non-benefit rates before eligible rates because they are cheaper.
While this direct strategy claims to be customer-friendly, the reality is that it is sometimes quite the opposite.
“You know you’ve got to think very carefully about the implications… I assume the goal and the intent is to make sure that the booking comes direct, but it is not understanding that in many cases the customer is choosing that channel for a number of other reasons and that it doesn’t suit them to book it directly,” says De Vries.
Hilton did not respond to Travel News’s questions on the matter. Marriott’s response simply pointed out that agents could insert clients’ loyalty membership numbers into bookings which use eligible rates.