Reassessing Expedia’s role in the distribution mix
For several years, I have noticed some strange behaviour from Expedia and its sites Hotels.com and Expedia.com. Recent events have made me reconsider how I segment them.
For a number of years, I have observed what I can only call a “glitch” (irony intended) in the public prices shown to customers: the price for paying online is often lower than the price for paying at the hotel. It gives the impression of a very well-designed price-dumping tool.
“By chance, paying online is always cheaper.” #RevenueManagement
If Expedia itself shows different prices depending on the payment method, what can we expect from the terms it offers its affiliates?
OTAs such as TravelRepublic and Muchoviaje compete hard to show the lowest price. That behaviour does not surprise me; they have been doing it for years, and I doubt they will give up such a profitable business. But what I am about to describe may not have reached everyone yet.
About two months ago, Daniel Sánchez from Paraty Tech contacted me on Skype. He had seen Expedia.com and Hotels.com dumping third-party products at other hotels in the accounts he manages. I did not believe it at first. After checking my own hotels on those sites, I gave it little importance and assumed it was the usual dumping on pay-online rates.
A few days ago, everything took an unexpected turn. Daniel got back in touch to tell me about an unusual price disparity at one hotel in my chain. I was astonished to find that Expedia was offering room types from Hotel A at Hotel B. After looking further, I discovered that the wrong hotel had been mapped between Expedia.com and the third-party supplier, creating a confusing mix of rates and room types.
The price changes during checkout
In this case, they still seem to have some way to go: the public price shown at the first step of the purchase can differ from the price shown at the second step.
All of these events make me uneasy and less confident, and they have led me to reconsider how I work with Expedia in the short to medium term.
- Will we need to contract with them in order to sell on their .com sites?
- Will they use this as leverage to ask for better terms, as other OTAs already do?
- Will they keep watching Booking.com from the sidelines, or is this a total change of direction?