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Retail model . While Expedia is initially offering a choice to guests , excluding advanced purchase products , there is no incentive for a guest to pre-pay via the Merchant model . The analysis also assumes no change to the commission rate paid to Expedia .
Industry reacts “ Expedia ’ s Traveler Preference Model is in response to the OTA retail model already widely accepted in Europe , Africa and the Middle East ,” says Choice Hotels International CEO Steve Joyce . “ Choice has reviewed the new model , and in our discussions with Expedia , we are focused on ensuring that our franchisees don ’ t incur increased costs — specifically credit-card fees that would come with Expedia Traveler Preference based on current merchant discount rates .”
“ This is a serious issue , we are aware of it and owners won ’ t lie down ,” says Laurence Geller , former CEO of Strategic Hotels & Resorts , Chicago . “ Owners are pretty well up to speed with this , and chains know about our objections and acknowledge that this is a serious issue . Management company CEOs understand this and will work it out . It is never easily worked out , but I think the big boys will solve it , and other brands will follow .”
During a HOTELS webinar about asset management in mid-October , IHG COO for the Americas Bob Morse responded to a question about this very issue , saying , “ We are actively working with the IHG Owners ’ Association to talk about where we will go and how this will work . This is a decision we will not make in a vacuum , and we will seek owner input and dialogue .”
Geller adds that a situation such as this speaks to a bigger issue . “ I can fight these individual issues , but what is happening now because of technology and new ways of thinking about productivity is that we are facing new paradigms in relations between owner and operator as outside
“ Growth in that source of demand ( which
Expedia has the ability to target ) is definitely a qualitative positive to the change in the model if that is how those customers book …
… However , the risk of share shifting from brand . com to Expedia now that customers can pay at checkout is a qualitative threat . Both of these issues are unknowns at this point .”
– Michelle Russo , HotelAVE
influences such as Expedia are having an impact on the very dynamic of the hotel management agreement .
“ We will need to rethink how it works , what a chain should be swallowing and what owner involvement is ,” Geller continues . “ This will be worked out , but the bigger issue is that the relationship between the owner and operator has to be rethought .”
Expedia ’ s side Expedia says the white paper assumes up to a US $ 4 fee for all bookings under the ETP program , and claims this is not true . A spokesman tells HOTELS only a portion of Expedia bookings will be Hotel Collect . The additional fees / costs referred to only apply to Hotel Collect bookings .
However , the white paper authors quickly responded by saying the approximate US $ 4 fee is not based on all bookings , but for every US $ 100 that goes through Expedia under the new retail model . “ HotelAVE ’ s analysis is based on publicly disclosed Expedia figures , figures provided privately by Expedia , Morgan Stanley research and , of course , HotelAVE analysis ,” Russo says .
Expedia went on to say many of its hotel partners already incur creditcard fees in their dealings with the OTA . This is because these hotel partners choose to receive payment from Expedia using virtual credit cards . This allows hotels to receive funds immediately following the guests ’ checkout , as opposed to waiting for an invoice to be paid , but it also results in credit-card fees to those hotels . Thus , Expedia says the impact of credit-card fees is overstated in the white paper . For reference , Expedia says some major U . S . hotel chains handle more than 97 % of their bookings in this manner .
In its final rebuttal , HotelAVE agrees that Expedia has a lot to offer , especially by attracting international customers . “ Growth in that source of demand ( which Expedia has the ability to target ) is definitely a qualitative positive to the change in the model if that is how those customers book ,” Russo concedes . “ However , the risk of share shifting from brand . com to Expedia now that customers can pay at checkout is a qualitative threat . Both of these issues are unknowns at this point .”
www . hotelsmag . com December 2012 HOTELS 11