InterContinental Hotels Group (IHG) is focusing on mobile to bring customers the brand experience that cannot be offered by “middlemen” – online travel agencies (OTAs) like Expedia and Booking.com.
At the Mobile Marketing Summit: Holiday Focus 2013 IHG Atlanta executive, Bill Keen, with the rather long title of “director of mobile solutions and emerging products for Web and interactive marketing,” was quoted as saying “The Expedias have taken over the first two steps [of search and booking]”.
While Keen’s statement can be called a rant at the OTAs’ making money at the expense of the hotels (the Expedia group raked in US$2.937 billion in 2008), this reflects hotel operators’ dissatisfaction with the way OTAs – aka aggregators – control pricing.
In France, the Commission d’Examen des Pratiques Commerciales (Commission for the Examination of Trade Practices) recommended that OTAs, like Expedia and Priceline.com, stop the practice of rate parity – where hotels could only offer their lowest rates at the online agencies’ websites.
French lawmaker Razzy Hammadi said rate parity should be banned by the French government as it violates French regulations. Laurent Duc, a director at UMIH, the largest hotel trade group in France, lamented: “We have lost control over our own pricing policy.” Rate parity prevents hoteliers from offering lower rates to customers who book with them directly.
Expedia quickly brushed this aside by stating they haven’t violated any law, instead providing enhanced competition benefitting consumers while hoteliers get considerable advantages like “excellent visibility and to a wide client base” in exchange for rate parity.
Elsewhere in the UK, Expedia and Booking.com are embattled with allegations of colluding with some hotel groups to fix hotel prices at ‘discount’ websites to be the same as the normal price. Ironically, IHG – the world’s biggest provider of hotel rooms – is one of the hotel chains the Office of Fair Trading is suspecting of working with the OTAs to ‘fix’ prices for customers who look for discounts.
Kieran Corcoran, writing about the OFT investigation, which started 2010, said:
“Searches of discount websites for hotels in the InterContinental portfolio in London and Chicago have shown that several discount websites offer the same prices as booking directly.”
In short, there is no hotel room price difference whether you go to the online travel agency in question or go directly to Hotel InterContinental’s website (or mobile app).
As a result of the OFT’s investigation Expedia, Booking.com, and IHG have proposed commitments allowing discount sites to offer cheaper rooms. These proposals were offered in a public consultation (Sep 9-13) designed to amicably end the OFT investigation.
In the light of the OFT investigation, IHG’s pushing for a greater customer mobile experience could be part of a move to distance itself from Expedia and other OTAs. And the first step is to find something about the OTAs to complain about.
But if it is true that prior to their commitments, there were no differences in hotel room prices between discount OTA’s and direct booking, then IHG shouldn’t be complaining. If IHG executive Bill Keen’s statement “we try to get people to book direct but they typically book on an aggregator” is true then it is only to be expected. After all, OTAs have more online visibility. And bookings are expected to rise due to mobile travel apps.
So what’s in it for mobile?
IHG’s Keen did acknowledge that Expedia and other aggregators already win in the first steps of the booking process.What IHG wants to achieve with mobile, moving forward, is to enhance loyalty and the customer experience – by providing customers with clear hotel directions and itineraries, giving information on how best to dine and get entertained while on vacation, and giving top of the line hotel service – all to strengthen IHG brand recognition and loyalty.
Of course these strategies are nothing new. They just got mobile. And a bigger audience. That’s why Expedia and other OTAs also have their own mobile apps.
While IHG believes (and we agree) that apps are most used by loyal customers, they first have to get loyal customers. Refraining from price fixing and offering great customer experience should help in that. Only then will the customers’ mobile experience with IHG become truly memorable.
Phil Talbot is founder of SAAVI – the mobile ordering specialists and the resident expert in mobile ordering systems. You can follow SAAVI on Facebook.