July 2012 promotions from Top Ten hotel loyalty programs:

Links to my Loyalty Traveler posts provide more detail and promotion analysis for each offer.

Most hotel loyalty promotions are two to four months in duration.

The easiest way to quickly see a list of all hotel loyalty promotions discussed on Loyalty Traveler is to check my Loyalty Traveler Facebook page. All Loyalty Traveler post links feed into Twitter and all my tweets feed into Loyalty Traveler Facebook.

Summer 2012 hotel loyalty promotions

Le Club Accorhotels - this Europe-based program officially changed its name from A|Club to Le Club Accorhotels on March 28, 2012. Accor Hotels offers a variety of global regional bonuses and rate discounts. The program tends to have regionalized rate and bonus points promotions. Read More…

Yesterday I was in Seattle visiting with the inspiring women who founded Passports with Purpose. Many of you reading this blog participated in the PwP 2011 fundraiser this past December to build two libraries in Zambia by contributing $10 for the chance to win a travel prize. Perhaps you even entered for the chance to win 110,000 Hyatt Gold Passport points donated by Hyatt Hotels who sponsored Loyalty Traveler blog for the PwP projects in 2009 and 2011. Read More…

Travel media is buzzing over the new hotel booking site Tingo.com that launched yesterday.  Tingo.com is a hotel booking site that lets a person book a hotel and then receive an automatic refund if the hotel rate drops before the hotel stay’s cancellation date. Some press articles are calling this site a major game change for consumers that could “potentially corner the travel/hotel booking market”.

The Tingo.com concept is simple and a radical shift from other online travel agency hotel booking sites. Read More…

A travel article in the Los Angeles Times today seems to be filled with mixed messages. The title “Many Americans dream of driving across the country, survey shows” says 25% of men and 33% of women surveyed “always wanted to drive across the country” and have not yet achieved this adventure. 41% of Americans said they had already driven across the country in the Expedia sponsored survey conducted by Harris Interactive of 2,262 adults.

According to the survey, only 23% of Americans expect to travel internationally in the next year (and that includes Canada and Mexico).

I am an American who has made several cross country road trips across the USA. As a child I traveled across the country from California to the east coast and back with my parents – a couple of times. As an adult I have driven California to Maine a couple of times including from Eureka, California to Ellsworth, Maine which is about as far as a person can drive in the USA cross-country point-to-point. 

Eureka, California – Ellsworth, Maine = 3,491 road miles.

What I would like to know from the survey is whether people who had made cross country road trips were traveling for fun or what I think are more likely reasons for employment or family issue? My coast to coast cross country trips were all motivated by some other reason than a travel vacation.

The only people I recall taking cross country road trips for fun were young adults or retired adults with no employment commitments and school teachers who have six to eight weeks in summer to travel for an extended period.

Last summer I met a couple at a Holiday Inn Express in Salt Lake City from Nova Scotia who had driven across Canada to Vancouver, down the west coast to San Francisco and they were driving back across the USA via Interstate 80. The husband was retired and his wife was a school teacher.

My point is cross country driving is a relatively expensive way to travel since the time on the road requires lodging, unless you plan to couch surf or you are driving a vehicle you can sleep in which means your gas total is likely much higher. Road travel takes time. Six hours of driving a day gets you about 300 to 400 miles for the same amount of seated time as it takes to fly cross country coast to coast.

Not Enough Time or Money or Both

The statement by Joe Megibow, VP of Expedia, that tough economic times have forced Americans to cheaper vacation alternatives by driving instead of flying and taking shorter, more frequent trips does not match up with the objective of making a cross country road trip and the time needed to travel the USA by road rather than air travel.

That statement kind of knocks out cross country driving from coast to coast in the USA.

7,000 miles / 25mpg = 280 gallons of gas. At $4/gallon = $1,120. Our California gas prices right now are $4.20 to $4.35 on average.

Figure about $1,000 in gas more or less to travel from New York to California and back.

Last summer I took two extended road trips from Monterey, California to Vancouver, Canada and back. Then I traveled Monterey to Denver, Colorado and back. This was about 6,000 miles in road travel. I took over four weeks for these trips and I felt rushed most of the time with not enough time to stop and sight see around the places I was driving through in the western states.

I spent three nights in hotels each way driving the 1,200 miles to Denver when there is a nonstop United Airlines flight to Denver that requires 2.5 hours each way. My wife says she doesn’t want to do the desert drive again this year when I travel to Colorado for Travel Blogger Exchange 2012 (TBEX12). Five hours of flight time compared to 40 hours of drive time is preferable to her.

I am still debating whether to fly or drive. I really want to work in a whitewater rafting excursion in Utah.

Breaking News March 5: BlogWorld, the leading blogger convention in the USA just bought TBEX.

One thing I am sure of for true travelers on the road is the value of Wyndham, Best Western and Choice hotel points when roadtripping. There are many locations where Hyatt Diamond and SPG Platinum are meaningless and even Hampton Inn, Fairfield Inn and Holiday Inn Express hotels are far apart.

Brokeass Mountain Road Trip, July 2011

Monterey, California – Denver, Colorado

• Yosemite’s Tioga Pass Road across the Sierra Nevada Mountains
• Westin Monache Resort Mammoth for year round vacations
• Even Lonelier than the Loneliest Road in America
• Earth’s Oldest Trees in Great Basin National Park Nevada
• Less extreme than 127 Hours in Utah
• Brokeass Mountain Tour eastbound – Hotel Value at High Elevation
• Brokeass Mountain Tour visits Starwood in Denver
• Driving by the 14ers South Park to Aspen, Colorado
• Top of the Rockies on the High Road to Aspen – Independence Pass 12,095 feet.
• St. Regis Aspen – Too Late to Cancel
• Aspen, Colorado to Park City, Utah: Ghost lands of Buffalo Soldiers, Utes and Dinosaurs
• The California Trail across Nevada
• Homeward Bound – Carson Pass Highway 88 over the Sierra Nevada to Monterey

Expedia Rewards launched today, March 28, 2011. Loyalty Traveler analyzed the points earn and burn value for hotels and published program benefits.

Earn Expedia Rewards points

Expedia Rewards program base earn rate offers 1 point per USD $1 in Expedia travel purchases. Travel packages including a hotel stay with a total of two, three or four components earn 2 points/$1, 3 points/$1 and 4 points/$1, respectively.

Travel package components include airfare, hotel, car and activities.

• 1 point/$1 spent on hotels
• 1 point/$1 spent on flights
• 1 point/$1 spent on activities
• 2 points/$1 spent on hotel + flight travel package (or hotel + one other package component)
• 3 points/$1 spent on hotel + flight + car travel package (or hotel + any two other package components)
• 4 points/$1 spent on hotel + flight + car + activities travel package

Expedia Rewards Elite Plus

Expedia Rewards has an elite member program. Annual Expedia Elite Plus qualification requires 15 hotel nights or $10,000 in annual Expedia travel bookings.  Expedia Rewards members need to book and stay 15 nights or spend $10,000 in Expedia travel during 2011 to earn Elite Plus status that will expire Feb 28, 2013.

A single registered Expedia membership account will be given credit for all bookings made to that account, regardless of who completes the travel. – Expedia Elite Plus terms and conditions.

One of the strongest competitive advantages for Expedia Rewards compared to traditional frequent flyer and frequent guest loyalty programs is the ability for the Expedia account holder to earn points and credit with purchases for other travelers. All you home-based travel agents can book your family trip and earn Expedia Rewards for everybody else’s flights and nights. In this sense, Expedia Rewards is akin to a travel credit card program for travel purchase points and a spend based elite member option, even if you don’t travel all that much.

If I book 15 hotel room nights in 2011 through my Expedia Rewards account, then I will earn Expedia Elite Plus status through February 28, 2013 regardless of the traveler names for the booked hotel rooms. I can’t earn points with traditional hotel loyalty programs in my personal hotel member account without being one of the guests staying at the hotel. 

Elite Plus on Airline purchases: $10,000 in airline tickets and total travel purchases is a high threshold for earning Elite Plus. The threshold is much lower for hotel bookings at 15 nights. Basically the profit margin on airline tickets is very low for Expedia. Most of Expedia’s profits come from hotel bookings according to industry data I have read.

Expedia Elite Plus Benefits and VIP Access Hotels $30 Promotion

Elite Plus members can receive free upgrades, late checkout and other perks with Expedia “VIP Access” designated hotels.

Expedia VIP Access Hotels earn 2 points/$1.

Expedia Rewards offers a $30 coupon on stays of 3-nights or longer at Expedia VIP Access hotels through December 31, 2011 when booked by March 31, 2011. (Loyalty Traveler is disappointed to see such a short booking window.)

Elite Plus members also have a Hotel Price Guarantee. The terms indicate you can get a lower room rate for stand-alone hotel bookings if found on a U.S. based website anytime from time of booking on Expedia until day before arrival.

There might be some real potential for hedging your hotel rates with this aspect of the program. I’ll tackle my ideas on the Expedia Rewards Elite Plus Hotel Price Guarantee in a different Loyalty Traveler post.

Other notable Elite Plus member benefits are exclusive offers and early access to sales.

Redeem Expedia Rewards points

Expedia currently only has a hotel coupon redemption chart. The airfare redemption table is not online yet.

The hotel coupon table shows a rather low 1% to 2% rebate value on Expedia travel purchases for standalone hotel, airfare, and car rental bookings with an earn rate of 1 point per dollar.

MasterCard Double Points through August 31, 2011

A special promotion with MasterCard earns double Expedia Rewards base points on hotel or hotel packages paid with MasterCard through August 31, 2011 increasing the potential rebate up to 2% – 4%.

MasterCard Double Points with Expedia Rewards requires promotion registration using Expedia Rewards number.

Hotel coupons are one-time use meaning the best value $1000 coupon can only be redeemed on a single hotel stay. $300 hotel coupon stays will offer far less rebate value through Expedia Rewards than $1,000 hotel coupon stays.

Earning 50,000 points requires as much as $50,000 in travel purchases and a minimum of $12,500 in Expedia travel purchases if earning 4 points/$1 on a four component vacation package purchase. That is only an 8% rebate on $12,500 in travel spend when 50,000 Expedia Rewards points are redeemed for a $1,000 hotel voucher that must be used in one hotel stay.

Loyalty Traveler Analysis of Expedia Rewards Hotel Coupon Rebate Value

For comparison, Loyalty Traveler values the hotel loyalty program points earned from many hotel stays at 20% to 30% paid room rate during good promotions and 50%+ rebate during high value promotions.

In real numbers this means I expect to save $20 to $30 on a future hotel stay for every $100 I spend at the hotel during a good loyalty promotion and upwards of $50 in future hotel stay value for every $100 I spend when a high value promotion comes around. And Expedia Rewards guarantees me only 2% future hotel stay rebate value after spending $50,000. That is $2 future hotel stay savings for every $100 in hotel spend.

Expedia Rewards is a fine online travel agency choice for airfare tickets and may provide a good savings on hotel rates with some travel package deals, but the rebate on stand-alone hotel stays bookings is likely to be less compared to the points and benefits offered through the hotel brand’s traditional loyalty program which for me average 20% to 30% on most of my hotel stays in programs like Hyatt and Starwood and Priority Club.  

Expedia Rewards Sample Earn and Burn Chart from Website

http://www.expedia.com/daily/highlights/rewards/expediarewards/sample.asp

MasterCard payment for double points through August 31, 2011 creates the potential for 8 points per dollar and 16% rebate (sample #3) on Expedia spend. Throw in a VIP Access hotel with a four component Expedia vacation package and pay with MasterCard (sample #4) and you peak at 9 points/$1 or a potential 18% rebate on your travel purchase with Expedia Rewards.

Expedia Rewards compared to Hyatt Gold Passport 10,000 bonus points after 5 nights

Assume $100 per night on two 5-night stays = $1,000 spend.

• Hyatt Diamond member = 2 x 1,000 points Diamond amenity = 2,000 points.
• Gold Passport Base points = 5 points/$1 x $1,000 = 5,000 points.
• Gold Passport Diamond elite bonus (30%) x $1,000 = 1,500 points.
• Hyatt Promotion (April 1-June 30) = 5 nights for 10,000 points + 2 nights x 5,000 points for 7^th and 9th nights = 20,000 points.

28,500 Gold Passport points worth $427 to $855 in hotel stay rewards based on estimated value of Hyatt Gold Passport points in the range of $15 to $30 per 1,000 points. This sample for Hyatt shows a 42% to 85% rebate value compared to an 8% rebate value with Expedia or a maximum 16% during the MasterCard promotion.

Paying $1,000 on Expedia earns only 1,000 points for standalone hotel bookings. That offers no rebate at all on my $1,000 in hotel spend since I need 3,500 points just to redeem for a $25 hotel coupon.

Expedia Rewards is still a great consumer bonus when booking independent hotels not affiliated with a hotel loyalty program where the guest would otherwise not earn any points with future travel value.  

The Hotel Analysis

Unfortunately, hotel rooms purchased on Expedia frequently involve a trade-off for the frequent guest. 

Expedia bookings earn no points in most hotel loyalty programs. Even elite benefits do not apply for stays with a major chain where you have elite tier status when booked through Expedia.  You may still receive benefits at the discretion of the hotel.

Why hotels do not give points for third party online bookings.

American Airlines or United Airlines are owned and operated as one major corporate company. The company employs the workers, owns and leases aircraft and facilities and in most cases manages the frequent flyer program. Airlines benefit regardless of the channel where you buy your ticket. The price of a ticket is generally the same on Expedia as it is on the airline site. Expedia does not make much money on airline tickets relative to its profit margin on hotels.

Hotels are different from airlines in that many independently owned hotels align or brand with a parent hotel chain like Hyatt or Best Western. The hotel loyalty program acts primarily as a marketing partner for the hotel.  The hotel owner pays for this marketing arrangement, generally a percentage of room revenue. The hotels employ their own workers, manage their own site financials, and participate in a hotel loyalty program in an association of hundreds or thousands of other independently owned hotels.

Bookings made through Expedia are something like a 15% to 25% booking fee in terms of room rate going to Expedia rather than to the hotel. Hotel loyalty programs like SPG and Priority Club are marketing organizations geared to move hotel bookings to lower-cost direct channels that reduce the overall cost of selling hotel rooms and improve profit margins. Hotel loyalty program points and benefits are high value rebates direct to the customer. The customer is happy with the value added benefits of the hotel stay and the hotel makes more money than selling the room through Expedia who takes a significant portion of the room rate.

Expedia gets you the same room price most of the time, but the hotel loyalty benefits are not the same since a much larger portion of the room rate is going to Expedia compared to a direct booking with the hotel. You as the frequent guest have already cut the hotel’s profit margin by booking through Expedia. The hotel may not want to incur more expenses by giving you hotel loyalty benefits like a room upgrade, points, free breakfast or internet access.

FlyerTalk discussions indicate Marriott and Hyatt often recognize a member’s elite status on third party bookings, but this is no guarantee.

Earning hotel program loyalty points is generally not a benefit with any hotel loyalty program for third party bookings through an online travel agency like Expedia.

Is Expedia Rewards a loyalty program gamechanger?

Expedia Rewards might be incentive for me to move bookings to Expedia rather than Orbitz or Travelocity, however, the low rebate value of points means I am unlikely to move bookings away from hotel brand websites unless there is also an exceptional cash savings to the Expedia rate. I find my hotel stay point bonuses generally exceed a 10% future stay rebate and often are 25% or more of the paid room rate when used for a future hotel stay.

Therefore, Expedia Rewards is not a significant game-changer in hotel loyalty programs when it comes to booking hotels where there is the option to earn traditional hotel loyalty points. The value of points in Hyatt Gold Passport, Hilton HHonors, IHG Priority Club, Starwood Preferrred Guest and Marriott Rewards are generally much more valuable than Expedia Rewards points when booking your own hotel stays. Expedia Rewards is great when booking hotel stays and flights for other people through your own account.

Expedia Rewards is a good value for extra travel points from airfare purchases and travel packages where the hotel and airline savings provide an instant rebate value on travel cost. Airfare purchases on Expedia without the risk of lost benefits provide a bonus credit in your Expedia Rewards account in addition to your frequent flyer account miles.

Just remember Expedia Rewards hotel bookings may leave your traditional hotel frequent guest account shortchanged!

Hyatt Gold Passport and Marriott Rewards elite members may find a surprise awaiting that discount hotel stay booked as part of a travel package or through an opaque site like Priceline or Hotwire.  Hyatt and Marriott elite members report recognition in terms of club lounge access and free breakfast even though the hotel was booked through Expedia, Travelocity, Orbitz, Priceline or some other online travel agency (OTA).

Hyatt Diamonds may not be getting a suite upgrade on a Priceline booking, but you may receive Welcome Amenity points and you may earn points on other charges to your room.

Marriott Rewards members state receiving access to the hotel Club Lounge and Club Level rooms and earning points on incidental spend.

I was upgraded to a suite and lounge access at a Hilton Hotel one time when I was HHonors Diamond on a Priceline stay.

Register Your Hotel Loyalty Membership Number to OTA Bookings

Add you hotel loyalty membership number to any third party hotel reservation after your booking is confirmed by the OTA. Call the hotel, email, or take time at the check-in desk to register your hotel membership number to the reservation.

There is nothing to lose and high potential for gain when your hotel stay receives some loyalty recognition during your stay like a room upgrade, breakfast and internet, even if no elite stay credit is earned for the third party OTA booking.

The End of the OTA Merchant Model

Most hotel loyalty programs do not recognize loyalty members who book through third-party online travel agencies (OTA) due to the high cost of distribution for the hotel owners with the OTA Merchant Model.

I read an article this morning by Max Starkov – “End of the OTA merchant model – this time for real” providing some numbers on the OTA Merchant Model.

The data cites 20% to 25% room rate as a typical fee for the hotel to sell a room via an OTA.

For example: Expedia sells a room for $100. The room is also selling for $100 on the hotel’s own websites. Expedia makes $25 when it sells the room. The hotel loses on a room it did not sell directly to the guest. The hotel loses about 90% of that $25 Expedia gained through an indirect sale.

Seems to me consumer logic would indicate more hotel guests would like the added value of hotel points, free breakfast, internet and other amenities provided when booking sufficient volume through a specific loyalty program to earn elite membership and its value-added perks.

Comparing straight room rates for any specific major brand hotel, the hotel websites sell the room for the same price as an OTA like Expedia and Travelocity.  Hotel websites offer Best Rate Guarantee terms to provide an additional discount or benefit if a lower rate than the hotel sites low rate is found on an OTA site elsewhere.

Yet, hotels have seen the OTA share of bookings for the top 30 hotel brands rise from 25.4% in Q3-2008 to 37.5% in Q3-2010. This has occurred in the past two years while hotel loyalty programs have been offering the most rewarding loyalty incentives in years.  The proportion of people booking hotel rooms outside the hotel’s own websites has risen despite offers for free nights and huge points bonuses through hotel loyalty programs.

So are consumers ignorant to the value of hotel loyalty programs as hotel guests or are they really getting incredible savings with OTA bookings?

Travel packages where the hotel is bundled with a car or flight and opaque sites like Priceline and Hotwire where the hotel is not known until booked are popular as other cheaper options than published room rates. Bidding database forum sites like BetterBidding.com and BiddingforTravel.com can assist you in narrowing the likely hotels you will book into when submitting a successful bid for a hotel room on an opaque site like Priceline.

OTA indirect booking  v. Hotel site direct booking

The tide of OTA popularity during the period of extraordinarily low hotel rates in 2009 and 2010 may keep rising and make trouble for hotels seeking to push rates higher and faster in 2011.

Enjoy elite benefits on your third-party bookings when you get them. The economics of hotel booking channels make this a highly generous practice as a common courtesy for their elite loyalty program members at Hyatt and Marriott hotels.

My only experience this year with an OTA booking for a major hotel brand was a Hyatt Place Orlando Airport booking that Gold Passport refused to recognize as a Best Rate Guarantee valid claim even though I booked the hotel for $90 less than the Hyatt website wanted. I was a bit grumpy on arrival at missing out on a hotel stay credit in what I still feel was a wrongfully denied BRG claim, but that feeling quickly dissipated when I entered the hotel lobby to find free food and beer in a hotel happy hour.

Please share your experiences with hotel loyalty elite status and third-party OTA bookings.

Did you receive elite recognition and benefits?

FlyerTalk – Marriott Benefits on OTA Stays

FlyerTalk – Hyatt Benefits on OTA Stays

Anarchy Loyalty in the U.K.

Cornell Panel talks distribution management, customer loyalty (Nov 16)

Expedia on how to grow your ADR without impacting occupancy (Nov 29)

Expedia is the goliath of the online travel agencies. Hotwire is an Expedia company, along with Hotels.com and popular travel sites like TripAdvisor.com and SmarterTravel.com.

Basically this new offer from Expedia just placed Hotwire.com hotel inventory on the Expedia website as “Unpublished Rate Hotels”.

Opaque Travel Agency Model

Opaque hotel sites like Priceline and Hotwire provide deep discounts on hotel rates by not revealing the name of the hotel until after you have successfully purchased the room. You, as the consumer, have control over the general vicinity in a city where the hotel will be located and the option to choose a hotel star category rating to get a general market segment from economy to luxury class hotels.

The hotel sells a room at a discount through the online travel agency, but does not publicly advertise the low rate. The opaque site makes a profit based on the service fee and any difference between the purchase price the consumer pays and the block rate the online travel agency (OTA) paid for the hotel rooms.

I find good value in opaque sites when there is not a reasonable hotel rate in the vicinity I want to stay. That being said, I haven’t used an opaque site since 2007 when I needed a cheap room in Washington, D.C. and the 12,000 points for a Starwood Hotel just didn’t seem like a good use of points when I could stay at the Marriott Key Bridge for $100 all-in through Priceline. Room rates were over $300 per night for the same Marriott Hotel I booked through Priceline.

Rates are on the rise again in many city locations and the opaque booking sites will likely continue to grow. These sites have done well despite the past two years of unprecedented low hotel rates and amazing hotel loyalty program promotions available directly through the hotel chain’s own booking sites.

So how can a hotel charge $300 for a room at its own site and $100 through an opaque hotel booking site?

Rooms are a perishable commodity.

A room that goes unsold tonight is lost revenue. The hotel can choose to let the room go empty or unload excess capacity at a discount to an opaque site or an online travel agency like Expedia, Travelocity and Orbitz.

Hotels do not operate like airline frequent flier programs where you get miles for flights regardless of what channels are used to purchase your airline ticket. Hotels have owners and generally the hotel loyalty program is not the owner of the hotels it represents.

Research I have read indicates the hotels lose about 25% of their profit margin when a room is sold through an online travel agency (OTA) like Expedia. The hotel’s profit margin is reduced further when selling room inventory to an opaque site like Priceline or Hotwire. When you fly United Airlines that means you are not flying American Airlines. But when you stay at the Westin, there is a reasonable probability that the Marriott Hotel down the street is owned by the same people. Hotels are branded and many hotel owners own hotels branded in different programs.

The high cost of selling rooms through online travel agencies compared to direct sell through the hotel’s own site and loyalty program sites is one of the primary reasons hotel loyalty programs can be so generous with loyalty member benefits like points bonuses, free breakfast, free internet, club lounge access and complimentary upgrades. Most hotel loyalty programs like Starwood Preferred Guest, Marriott Rewards, and Hilton HHonors only receive about 40% of their bookings from hotel loyalty program members. Yet, hotel loyalty program members are the most profitable segment of hotel guests. Business travelers want their loyalty program perks and are willing to pay more for them than the average guest.

Hotel Loyalty Programs are Marketing Organizations

The top ten hotel loyalty programs represent over 35,000 hotels globally. Priority Club is currently offering “Stay two times and get a free night” promotion. This offer applies to around 4,000 hotels worldwide (Asia-Pacific hotels excluded). A business traveler does not need to check individual promotion offers at various IHG brand hotels to see if there is a good promotion. The “Stay 2 and Earn 1 Free night” applies to almost all IHG properties across the board. There might be a $200 per night hotel in Miami with one chain or $250 per night with an IHG brand hotel. The Priority Club business traveler wants to earn a free night and will possibly go for that higher rate. The uncertainty of the specific hotel keeps many business travelers away from opaque sites like Hotwire and Priceline. These deals are primarily for leisure travelers seeking a deep discount as the primary factor over specific location of hotel.

The leisure traveler might be well out of budget range at $250 per night. This is when an opaque hotel room might be the better option for around $100 per night. The drawback is no loyalty credit for the hotel stay, even if it turns out to be an IHG brand hotel.

Your “Expedia Unpublished Rate Hotel” will not qualify for the Priority Club or Hyatt or SPG promotions.

The advantage for leisure travelers is the option to select hotels based more on price and less on immediate location. This is what makes opaque sites a great opportunity to cut the room rate if you have flexibility on your hotel location.

Loyal or Not – Here We Come

An even better strategy though for the leisure traveler is to plan your hotel stays to take advantage of low published rates that qualify for promotions and limit opaque purchases for locations where the hotel room rates negate the value of promotions and potential hotel loyalty benefits and a hotel reward night is also too costly or unavailable.

In Chicago last week many hotels were over $300 per night due to a major city-wide convention. I stayed at the Crowne Plaza Avenue Hotel in Chicago when the rate was $375 all-in per night. I used 25,000 points; effectively cutting my rate down to $150 for the cost of 25,000 points.

Some friends used Priceline for Chicago and secured a room at the Red Roof Inn right around the corner from the Crowne Plaza  for about $90 all-in. That is a good deal for someone in Chicago that night when most hotels were over $200 per night.

Was my room worth an extra $60? I had a room upgrade with a Mac computer on the desk and a great high-floor view of Michigan Avenue. I received two free drinks at the British pub off the hotel lobby.

All-in-all that may have not been a $60 added-value night, but I had the comfort of knowing exactly where I would be and I booked the hotel room using points less than two hours before I checked in to the Crowne Plaza.

Fooled Around and Fell in Love

Hotels have a love-hate relationship with Expedia, online travel agencies and opaque booking sites like Hotwire and Priceline. A room is a perishable commodity that is lost revenue every night it sits unsold. These online booking sites help advertise a hotel and sell rooms.

But hotels want to maintain higher prices than many potential guests will pay. Published room rates fluctuate; often by hundreds of dollars per night ($300 weekday or $99 weekend is not uncommon in major cities like San Francisco, Los Angeles, Atlanta).

Loyalty program members who can balance paying low published room rates and earn hotel loyalty member benefits like points, upgrades, and complimentary services during hotel stays can find that the overall value of staying loyal and booking through the hotel’s own channels will have a much higher added-value than simply getting a hotel room at a bargain rate through an opaque booking site.

But sometimes you just need a room and the promotions, upgrades, and benefits are not the primary concern.

Do your Homework before Using Opaque Booking Sites

Expedia’s Unpublished Rate Hotels, driven by Hotwire, or Priceline bargains may just be the savings needed to make the trip affordable. And if you do decide to go this route, then do your preparation.

BetterBidding.com and BiddingforTravel.com are two sites that have been operating for years where successful bids at specific hotels are posted and shared.

For example, I was able to see on BetterBidding.com the Portola Plaza Hotel, Monterey, California sold for $80 per night on Priceline on the weekend nights of November 5-7, 2010. This hotel was the Doubletree Monterey several years ago. These same dates will cost $215 per night (AAA rate) booking through the Portola Plaza hotel website. That opaque rate is a great deal for Monterey.

BetterBidding.com allows date search and location for winning bids and hotels

Opaque sites for booking hotel rooms have some incredible discounts. As Loyalty traveler I do not spend much time discussing these low rate booking options. I may pay more per night on average as a loyalty traveler, but often I do not pay much more.  Expedia unpublished hotel rates, Hotwire and Priceline do not earn free night credits.

I have had plenty of opportunities to compare the rooms I receive as an elite loyalty program member compared to the room category received through opaque booking channels.

BetterBidding Hotwire.com $98 for Parc 55 Wyndham Hotel weekday rate

Kayak.com published rate for Wyndham Parc 55 is 60% more.

Hotel News Now published a story on “10 hotel booking trends” from a presentation at the inaugural Hotel Data Conference by Brian Ferguson, Expedia VP of Lodging Demand and Analysis. Hotel News Now is the newsletter publication of Smith Travel Research, a leader in hotel rate data and research for the hotel industry.

The consumer trend of the past year has been a swing in hotel bookings made through online third-party hotel reservation sites like Expedia, Travelocity, and Orbitz. The viewpoint of Expedia, expressed by Ferguson, is the increased volume in bookings does not directly increase profits for third party online travel agencies due to the lower revenue generated as a portion of lower room rates across all hotel market segments.

What I want to share is the “10 Booking Trends” discussed by Expedia’s Lodging Demand and Analysis VP. I am just a hotel consumer who tries to figure out how to get great value from hotel rates. Reading what the industry experts have to say helps me focus my Loyalty Traveler work on a targeted audience who will benefit from my reporting on hotel rate trends as a frequent guest.

1.       Expedia VP Ferguson: Exchange rates are shifting travel patterns.

Hotel rates in UK have dropped primarily due to the better exchange rate for Americans. Combine the exchange rate with promotions and the UK is a bargain.

Loyalty Traveler: I totally agree, but the window appears to be closing on the exchange rate issue. Winter 2009 offered some of the best deals in years for UK and Europe due to the combination of a much better exchange rate for the US Dollar and hotel loyalty program promotions. The dollar has been losing ground as the stock market goes up. Anyone thinking Wall Street inflation?

2 nights for the price of 1 has been an ongoing deal for the past couple of years to entice travelers to the major chain hotels in Europe and Asia.

2.       Expedia VP Ferguson: Consumers are looking for a deal. Bookings made with promotions are increasing as a share of total hotel reservations.

Loyalty Traveler: I’ll take some credit for this one. I take the time to analyze hotel promotions for readers. Loyalty Traveler rarely books a room without a promotion offer. “Hotel value for the frequent guest” is the Loyalty Traveler motto. 10,000+ unique visitors a month are reading Loyalty Traveler to learn more about hotel loyalty program promotions.

3.       Expedia VP Ferguson: Promotions matter more than ever.

Loyalty Traveler: I get a chuckle out of all the news articles showing how to get better value from your spending in all segments of consumer purchases from groceries to hair cuts to travel.

I had an oil change yesterday for 25% off. The coupon took two minutes to locate on the internet. All the other people at Jiffy Lube paid full price.

Friends have commented I am a cheap ass when I pull out a 2-for-1 dining coupon. I rarely eat out for more than half-price.

I frequently stay in hotels for less than half-price. Promotions matter if you want more money for life’s other necessities and pleasures.

4.       Expedia VP Ferguson: Promotions are getting more creative. It used to be about cutting rates and now hotels add free nights and value-added incentives.

Loyalty Traveler: Promotions are more creative and take more time to analyze for this Loyalty Traveler. I’m looking for the deal whether it is a bargain rate now (free parking, free breakfast) or will result in a bargain hotel rate in the future (free hotel night).

5.       Expedia VP Ferguson: Customers who book online are trading up. Four and five star hotels are getting more affordable.

Loyalty Traveler: I have stayed in some of San Francisco’s finest hotels this year and only once paid over $125. And I received a $500 per night suite for that stay. 2009 is a leisure traveler’s hotel dream.

6.       Expedia VP Ferguson: There are massive swings in online market share.

Loyalty Traveler: No real comment to make here. I haven’t tried the phone call reservation this year. I’ve read articles on Hotel Chatter and Budget Travel about people getting a much better deal through the phone. I’ve been an online customer for 10 years and my experience has rarely been to find a better deal over the phone. I do recall my mother getting good phone rates when my mom and the hotel reservationist could not locate the online promotion I was telling her to book.

7.       Expedia VP Ferguson: Booking compression. People are waiting closer to stay date to book.

Loyalty Traveler: I reported in several posts that my rate analysis of San Francisco hotels revealed the lowest rates typically are found between 7 and 14 days before the stay date. Smart shoppers wait (or at least go with a rate allowing cancellation in case a better rate appears).

8.       Expedia VP Ferguson: Leisure rates went down first and are going down more.

Loyalty Traveler: My hotel rate focus is geared for the leisure traveler. I don’t stay in San Francisco on paid rates when a convention is in town and the hotels go up to $300+ per night. The same hotel room is around $100 per night, a 50% decrease from average leisure rates a year ago, during weeks when business travel is light. And getting an upgrade is much easier when there are not corporate executives buying up the suites.

9.       Expedia VP Ferguson: Increased use of rate fences in packages.

Loyalty Traveler: I am not a marketing person and I need to study this concept since I have been seeing it more frequently lately. Basically it seems the concept is to hide the room rate in a package of bundled services such as airfare, rental car, or hotel amenities like champagne and spa treatments.

I generally find these to be a poor value for a hotel when the components are broken down. Packages are convenient and there are some great deals if you need the car or the airfare. I think this is generally a better strategy for reducing high-cost airfare rather than getting a better value on a hotel room.

10.   Expedia VP Ferguson: Opaque channels are growing faster than non-opaque channels.

Loyalty Traveler: Opaque channels are hotel reservation sites like Priceline and Hotwire where you get a really low rate for an unspecified hotel. Opaque channels are the way to go when hotels are priced at high nightly rates. I opt for Priceline when the alternative is a $200+ night room.

My basic loyalty traveler argument is over the course of the year when traveling and staying 20 to 50 nights in hotels, the hotel loyalty program strategy can be used as effectively as Priceline to pay for rooms when they are relatively low priced and redeem points for high priced rooms.

I have saved a couple thousand dollars in past years using Priceline for trips when the chain hotels were high priced.

2009 has seen incredible promotions from hotel loyalty programs. My Starwood Hotels stays in May averaged less than $60 per room night at upscale hotels, frequently in suites, while allowing me to book $500 per night rooms with the free nights I earned.

Try doing that with Priceline.

St. Regis San Francisco "Priceline may be cheap, but this room was free"

My Loyalty traveler advice is to use online travel agencies (OTAs) for hotel rate comparisons, but always go to the hotel chain’s own websites for booking your hotel stay.  After you have narrowed your hotel selection down based on rates displayed on sites like Expedia, Kayak, and Orbitz, then search the hotel chain’s website for even lower rates. This will often reveal a better rate. Remember to check group rates like AAA and senior discounts which are not shown on the results of an OTA search.

Also, special offer rates through the individual hotel’s website many times will provide an even lower rate than AAA for your dates.

HotelMarketing.com posted an article showing OTAs make the majority of their revenue from hotel industry fees and commissions. Expedia made 60% of its 2008 revenue from hotel bookings compared to just 15% from airline bookings.

The case study shown in the cited article reveals Expedia had a 25% mark-up for hotel fee/commission on a $550 New York 2-night hotel stay. Basically the hotel is paying Expedia quite a chunk of change, $137.50, for a $550 booking.

The deep discounts available on special offer rates through the hotel’s own website are possible because the inventory off-loaded to OTAs is at a substantial discount to the hotel’s own listed rates.

In this case study the $550 booking for a New York hotel shown on Expedia is only generating $412.50 for the hotel while generating $137.50 in revenue for Expedia. This is equivalent to a nightly rate of $206.25 for the hotel.

What does this mean for the hotel guest?

The chances are fairly high that a potential guest looking for rates on the hotel’s own website will find a lower rate somewhere between the $275 shown on Expedia and the $206.25 the hotel has contracted with Expedia to sell the room. A $240 per night rate is a $35 savings for the hotel guest and generates an additional $33.75 for the hotel.

What do you do when you go to the hotel’s own website and you see a $275 rate just like seen on Expedia?

Advice: Go to the hotel’s website and look for AAA rates and special offer rates. You should be able to drop the $275 rate by 10 to 20% with a group discount like AAA or AARP or a hotel special offer rate.

The hotel is giving up 25% of its revenue to sell a room through an OTA, whereas the cost is only a few dollars to sell through its own website. This is the reason hotels require frequent guest members to book through hotel chain branded websites to earn loyalty program benefits. And this is the reason hotel loyalty program benefits can be generous.

A free breakfast, some hotel loyalty points, and a $50 room upgrade make the frequent guest a happy guest and may still bring in more revenue to the hotel than the guest on an OTA booking.

Loyalty travelers are generally happier travelers when it comes to getting good value on hotel bookings.

Loyalty Traveler Case Study: Hotel Rates Comparison between OTAs and Hotel Branded Websites

Chicago, Illinois

Friday night, August 14, 2009

Remember three facts about Online Travel Agency Rates:

1.      OTAs do not display AAA rates which are typically the lowest rate about 50% of the time.

2.      OTAs charge a small fee of $1 to $5 per hotel booking that is disguised in the additional Tax and Fees rate charged by the OTA for the booking.

3.      OTA bookings do not qualify for frequent guest benefits in most cases. Points and benefits earned from a hotel stay booked through the hotel chain’s own website can be a $50 to $100+ value.

The Hyatt Regency Chicago could earn 2,000 Gold Passport points using a G2 booking bonus and earn 2,500 points per stay with the current Gold Passport promotion. Along with base points earned, the frequent guest would earn over 5,000 points for this one night stay at the Hyatt Regency Chicago. 5,000 points is sufficient for a free night at a Category 1 hotel. That is a lot of added-value to forego on an OTA booking.

TripAdvisor.com is growing at an incredible rate.  I primarily use the site for hotel reviews.  There are also travel forums for discussion, restaurant reviews and recommendations, and destination guides.

In July when I was “mile-high” in Denver I wrote a post, Online Hotel Reviews, comparing TripAdvisor.com to other hotel review sites and its dominance for online hotel reviews.  Looking at the post again today I noticed it was littered with inaccurate assumptions which led to incorrect mathematical analysis of the data.  I had made the assumption that the 1% of site visitors making consumer-generated comments were all hotel reviews when they actually include all types of comments from bulletin board forums to restaurant and sight-seeing recommendations.  I’ll blame my inaccurate analysis on oxygen-deprivation for this California coastal kid writing on the high plains of Colorado.    

The main point I made then and now is TripAdvisor.com is way ahead of the pack for sheer numbers of consumer-generated online hotel reviews. 

TripAdvisor’s media network includes www.Airfarewatchdog.com,  www.BookingBuddy.com,  www.CruiseCritic.com, www.holidaywatchdog.com, www.theindependenttraveler.com, www.seatguru.com, www.smartertravel.com,  www.travel-library.com,  www.travelpod.com,  and www.tripadvisor.com.  Expedia.com is the parent corporate entity of this online travel site empire.

And with the financial backing of Expedia, TripAdvisor’s parent company, the social media website acquisitions of TripAdvisor makes this travel conglomerate the Bank of America of online travel research and search sites.  24 million unique monthly visitors and over 6 million registered members is an incredible database for the TripAdvisor-branded websites.

Tripadvisor fact sheet 

TripAdvisor does not actually sell hotel rooms.  Revenue is generated from pay-per-click sponsored ads on the webpage.  For example, looking at the Omni San Francisco Hotel webpage on TripAdvisor, there were 12 sponsored links for booking the Omni San Francisco Hotel through 8 different websites:  hotels.com (an Expedia family website), Expedia.com, Orbitz.com, Omni Hotels, HotelClub.com (Orbitz owned), CheapTickets.com (Orbitz owned), Priceline.com, and Otel.com.

From the top of the page the first booking option for the Omni Hotel is a toll-free telephone ad for hotels.com (Expedia owned).  The box below that has four sponsored links: Expedia.com, Orbitz.com, Omni Hotels, and Hotels.com.  Two of these links are Expedia booking sites.

Further down the page were four more sponsored links: HotelClub.com (Orbitz owned); CheapTickets.com (Orbitz owned); Priceline.com, and Otel.com.  The bottom of the webpage showed the same sponsored links as the top box.

While there were 12 sponsored links and one telephone toll-free number for actually booking the hotel from the main TripAdvisor webpage for the Omni San Francisco, the fact of the matter is five of these options are Expedia-owned websites and four are Orbitz-owned websites.  Omni Hotels has its own sponsored link appearing twice.  The other two sponsored link options were Priceline.com and Otel.com.

This analysis doesn’t help the consumer in determining which website link will have the lowest room price.  I am just looking at the webpage options provided to the consumer for this hotel property and the fact that most links from TripAdvisor go to Expedia or Orbitz companies.

Share of Online Travel Agency referrals from TripAdvisor for April 2008

Compete.com is a website analytics company that analyzes consumer behavior.  A Compete.com travel research report from July looked at the actual percentage of TripAdvisor referrals going to the different online travel agencies for the month of April 2008.

·         Expedia 48%

·         Travelocity 19%

·         Orbitz 16%

·         Hotels.com 11%  (Expedia)

·         Priceline 5%

·         Cheaptickets 1% (Orbitz)

·         Hotwire <1%  (Expedia)

Source: http://www.competeinc.com/research/newsletters/july-2008-travel-research/

The interesting aspect of this data is the large percentage of referrals going to Travelocity.com who had no sponsored links on the TripAdvisor webpage I studied for the Omni San Francisco hotel and few sponsored links on several other TripAdvisor hotel review pages I searched.  A few years ago (2005?) there was a Cornell Center for Hospitality Research report showing Travelocity.com most frequently had the lowest hotel rates of the Online Travel Agencies.  I have no idea if that would have any validity now in 2008.  I always book through the hotel owned websites for the best deal or seek the Best Rate Guarantee from the hotel company when I occasionally find a better rate with an online travel agency.

Compete.com had another interesting report posted September 11, 2008 analyzing the search traffic share for seven major online travel agencies.  The data reflects all travel search, not just hotels.  Expedia is the online search leader.

Online Travel Agency search share for July 07-July 08  (Expedia at 26% is referenced in the article and the other numbers are my estimates based on the Compete.com chart shown here)

·         Expedia 26%

·         Travelocity 17%

·         Orbitz 16%

·         Hotels.com 10%

·         Priceline 13%

·         Cheaptickets 10%

·         Hotwire 7%

Another chart in this report shows the percentage of paid search traffic to Online Travel Agencies (OTA).  36% of all search traffic comes through sponsored links.  The discussion at the beginning of this post regarding sponsored links on the hotel review webpages of TripAdvisor.com seems to correlate somewhat with this data.  Hotels.com has the highest percentage of visitors accessing the site through sponsored links (44%) and Hotels.com is also the most prominent OTA present on TripAdvisor webpages.

Travelocity is the second highest in percentage of paid search referrals (about 40%) and this may account for the high proportion of referrals from TripAdvisor although I did not see many Travelocity sponsored links on the TripAdvisor hotel review pages I checked.

Orbitz and its other company, CheapTickets.com, show about 35% of traffic is from paid search referrals. Their sponsored links are highly visible on TripAdvisor.  Expedia and Hotwire are around 34% paid search traffic.

Interestingly, Priceline.com has the lowest percentage of paid search traffic (about 27%), yet Priceline is showing strong growth in market share.  And I would expect them to gain even more market share in these tough economic times.

TripAdvisor.com “Take this job and shove it”

A former TripAdvisor web content editor, Diedre Kiely, filed a complaint in July claiming TripAdvisor violated Massachusetts law by classifying her and other content editors as independent contractors.  The suit is pending class-action certification in the U.S. District Court of Boston.  The independent contractors edit reviews of hotels and restaurants according to the complaint. 

The experience of unequal pay for the same work as a “permatemp” led me to say “screw corporate greed” and venture out on my own as Loyalty Traveler.  I still have no benefits and no paid vacation, but at least I have the opportunity to provide value-added content to other hard-working consumers and I can travel when I want.  

Posted from BlogWorld 2008, Las Vegas.  A big thank you to Randy Petersen and BoardingArea.com for sponsoring my trip here.