[eldavido]

I've spent the last three years building a hotel property management system. I hate OTAs. They are gross middlemen who charge criminally high commissions to hotel operators. And as much as I philosophically support what you're doing here, both Roomkey in general and Scout in particular, you're barking up the wrong tree.

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.

[degenerate]

What I completely don't understand is, I have tried calling hotels directly when looking at the hotels.com/expedia price, and asking if they can give me that rate directly or even a little cheaper. They never can. They always say "you'll have to book it through them" to get that rate. I've tried this at least a dozen times, always with the same answer.

Do these chains have some kind of written agreement with the websites where they are NOT allowed to undercut those prices, ever?

[eldavido]

Yes, it's called a MFN clause ("most favored nation") and is a standard deal term the channels negotiate with the hotels. They accept it because they have no choice.

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.

[smueller1234]

Except the MFNs were significantly weakened or struck down entirely by a number of the largest European countries. For better or worse: I think OTAs have brought many good things to consumers (efficient comparisons, more competition amongst accommodation for example) and they depend somewhat on being able to offer the best prices. After all, the point is to make the search easier and more efficient.

Disclosure: used to work for an OTA.

[jaclaz]

>Do these chains have some kind of written agreement with the websites where they are NOT allowed to undercut those prices, ever?

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...

[manicminer]

For rates that are available to everyone, the hotel chains are generally contractually restricted from offering a lower rate than the OTA. Currently the Priceline/Expedia duopoly wields a huge amount of power which IMO is ultimately bad for the consumer.

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.

[smueller1234]

I think you're pushing your agenda pretty hard here. Not that everything you say is entirely wrong either, but I think you're overstating benefits of one side and ignoring the others'.

You mention that the big OTAs seek (online only btw!) price parity. But you don't mention that the largest of the OTAs hasn't enforced it much for many years if ever (source: I wrote code for price parity analysis for them back in 2011). You also conveniently omit that MFNs have been tremendously weakened or outlawed in much of the EU.

I'd also like to challenge the notion that direct bookings are always better for you as a traveler. Hotels do play funny games with customers (eg overbookings) all the time (source: family from the hotel industry and I worked for an OTA where you could experience a day in the shoes of a customer service agent). Booking through large OTAs had two possible (albeit not guaranteed) advantages. The OTAs generally consider the traveler their customer. Not the hotel. So if there is a conflict ("I'm sorry - it looks like I dont have your reservation on file..."), they will put their considerable influence behind the shunned traveler. The fact that online ratings have significant impact on the rate of bookings that hotels get also means that they have an additional incentive to not mistreat the customers that can submit these ratings on the large OTAs.

Finally, let me make one more argument in favor of OTAs. I'll claim that consumers WANT to be able to efficiently search for accommodation that matches their criteria incl budget. I sure do! And it just makes sense: do you all remember the times when you had to call lots of hotels before you finally found that one that had a free room? Travel sucked a great deal more. And it was a lot more a matter of luck whether you'd hit a good one. So people WILL use modern technology to search places to stay. Without the OTAs, the search engines will fill that gap. And lo and behold: a very, very large percentage of the commission that OTAs charge goes to online performance marketing. (Some of those numbers are public so I could likely quote, but I don't want to accidentally disclose anything I contractually mustn't, so please look them up in the filings.)

Disclosure: used to work for an OTA, now for Google (but not anywhere near the travel or ads products).

[tuananh]

> Do these chains have some kind of written agreement with the websites where they are NOT allowed to undercut those prices, ever?

yes.

However, hotels can offer lower price via their own membership program

[ggm]

Not wanting to be stupid (ok.. losing battle) but what exactly are these huge expedia rewards? I've done quite a lot of travel and booking through them, and frankly, I am unsure what benefit I've got from it.

[whitepoplar]

I like the Hotels.com rewards program. It's like a punch card, and you're not locked into a particular hotel chain. Stay 10 nights, get a credit for the average cost of those 10 nights. They also price match if you find a cheaper rate anywhere else.