The perception of many travelers is that the best hotel prices are to be found at the big online travel agencies.
The hotel chains have recently been attempting to alter this perception by offering lower prices when you book via their own websites. This usually requires membership in a loyalty program but they have streamlined sign-up so that you can become a member during the checkout process.
This channel shift is really important for the hotels because they lose so much in commission to the OTAs, not to mention market relevance and a direct relationship with the customer.
Room Key is a joint venture between six of the largest hotel chains in the world and has unique access to these lower direct rates.
We have just launched a new product called Scout, a Chrome browser extension that activates whenever you view a hotel at major OTAs.
Scout looks at the lowest rate being advertised by the OTA and then searches in the background to see if it can find a lower direct rate. If it does, it automatically displays a notification along with a button that takes the user to the hotel's own site to book the lower rate and get additional perks of booking direct (e.g. points, free wifi).
For now the hotels Scout works with are mostly limited to brands belonging to larger chains (Marriott, Hyatt, Wyndham, Choice, IHG). E.g. try looking at a Holiday Inn on Expedia and you're very likely to see a Scout notification.
The OTAs are currently limited to the major players (Expedia, Orbitz, Priceline, Booking.com, Hotels.com, Travelocity) but we hope to grow this list to include metasearch engines (Kayak, Trivago, etc) in the near future. We also hope to introduce the extension on other browsers.
We do make money from booking commissions, but our commissions are much lower than those of the OTAs and more importantly go to a company that is trusted by and founded by the hotel industry.
Room Key's raison d'être is to lower the cost of hotel distribution for the hotel industry and to be an advocate for the traveler in what is a very confusing marketplace for the average consumer. Price confidence is severely lacking hence why consumers are often searching up to 6 sites before making a booking decision.
Very few people understand how the online hotel industry works and we would like to start to cast some light on that.
At the point where a customer is searching on Expedia or booking.com, you've lost. These sites have aggressive reward programs and are tuned machines to get people to buy.
The better approach is actual property-level differentiation that makes people want to stay at a particular hotel. If your customer sees hotel inventory as essentially fungible, which is what most of the undifferentiated inventory on booking/expedia is, they're going to pay commodity prices for it.
The chains need to step up and market directly to consumers, and GIVE ME A REASON TO LIKE THEM. Right now it's all sort of meh. Hilton, Hyatt, Rodeway, whatever, I just don't care, give me the lowest price and I'm there.
Do these chains have some kind of written agreement with the websites where they are NOT allowed to undercut those prices, ever?
Hotels play all sorts of games with this, including throwing in free stuff if you book direct ("it's the same rate") and doing "non-advertised" rates through loyalty and reward programs.
If you can't book directly with the hotel, it's very likely they don't have technology sophisticated enough to do a direct booking. You'd be surprised how bad hotel tech is. And the thing is, none of the independents want to spend anything to improve the situation. It's honestly madness.
It depends on where (which country) and when.
In Europe there were contracts with that "no lower rate" provisions, which have been (in some countries) deemed illegal.
To give you some loose data points, that was 2015 for France and Germany, August 2017 for Italy, here is a map:
http://hotelmanager-blog.trivago.com/rate-parity-hotel-indus...
The way that hotel chains can undercut the OTA price is via their loyalty programs. If you sign up as a member then you can very often receive a lower rate. All the major chains have been running campaigns around these loyalty rates recently and one study has suggested it may be having an impact [https://www.kalibrilabs.com/press-1/2017/10/26/new-study-fro...].
Due to our unique relationship with the hotel chains, Room Key (both our .com site and Scout) is the only hotel search engine that has access to these loyalty rates across multiple chains. This is how Scout is able to notify the user of a better rate in so many cases for the big chains. We'd love to expand to have more hotels join us and allow us access to their loyalty rates as well.
We've found through our research and user testing that OTA users fall broadly into two camps. First, those who believe, rightly or wrongly, that the OTA rate is always going to be cheaper. Second, those who use OTAs as a search engine to find the right hotel but then go and manually compare the OTA rate vs the rates available directly on the hotel's own site.
Usually the direct deal is better when you consider the entire package - lower loyalty rate + easier cancellation + points + free wifi etc. Being the customer of the hotel who has an interest in the quality of your stay vs a third party does count for something. I believe we'll start to see that count for more as time goes on.
yes.
However, hotels can offer lower price via their own membership program
So no, I cannot 'see lower direct hotel rates as I browse online travel agents'.
The marketing messaging is completely disjointed from what the product actually does.
I can assure you that the extension collects only what it needs to do in order to function.
