Tackling the Online Hotel Pricing Challenge, Expedia CEO Calls for Hotel Industry Unity

In the ever-evolving landscape of online travel, Expedia CEO Peter Kern has raised a clarion call at the Americas Lodging Investment Summit (ALIS) in Los Angeles, shedding light on the escalating crisis of unauthorized wholesale rates permeating smaller retail travel platforms. This momentous occasion marked Kern as the first head of a major online travel agency to address the prestigious ALIS conference, underlining the gravity of the issue for hotel owners and developers alike.

Kern’s impassioned plea delves into the heart of a billion-dollar problem – the misuse of wholesale rates in the expansive online marketplace. His message to hotel owners is unequivocal: the time has come to combat the rampant leakage of rates, a challenge that poses a significant threat to the efforts of online travel agencies in delivering the best prices to consumers.

Traditionally, hotels have earmarked specific rooms for discounted wholesale rates, reserving them exclusively for contracted partners to provide specialized deals to discerning clientele. Examples abound in collaborations with tour operators, where wholesale rates are strategically bundled with discounted flight packages. However, Kern highlights a disconcerting trend: certain agencies are willfully violating these agreements.

The consequences are palpable and frustrating for hoteliers. Wholesale rates intended for specific partnerships are finding their way into unintended channels, surfacing on various online travel agencies (OTAs) and comparison sites. Kern emphasizes the tangible frustration faced by hotel staff when guests arrive armed with rates unbeknownst to the hotel’s management.

Despite concerted efforts by Expedia, collaborating with major hotel chains such as Marriott to address the issue, the problem persists. Independent and regional hotel groups, in particular, continue to grapple with the insidious practice of “wholesale leakage,” undermining the very essence of online travel agencies striving to offer the most competitive prices.

In the face of being undercut on prices, some hotels appear indifferent, driven by the immediate benefits of achieving high occupancy rates. General managers, often evaluated based on these metrics, face a dilemma in prioritizing short-term gains over the intricate process of tightening distribution, which demands both time and financial resources.

Compounding the challenge is the elusive nature of tracking these unauthorized rates. Geographical restrictions shroud their visibility, with rates appearing normal on U.S.-based searches while revealing lower prices when accessed by travelers in the Asia Pacific region.

Acknowledging that some hotels may not fully grasp the severity of the issue, Kern finds this perspective puzzling. In a stern warning, he cautions against compromising direct-to-consumer rates for the sake of short-term occupancy gains, questioning the long-term viability of such a myopic strategy.

The clarion call echoes urgently across the industry: hotel owners and online travel agencies must forge a united front to staunch the flow of unauthorized wholesale rates, safeguarding the integrity of pricing structures and ensuring a fair and competitive marketplace for all stakeholders. The challenges are formidable, but the imperative for collaborative action is undeniable in navigating the complex seas of online hospitality.