Commissions of 15% to 19% are a major reason key Australian hoteliers say they have adopted a wait and see attitude before embracing Expedia Traveler Preference (ETP), which gives customers the option of paying immediately or at the hotel instead.
Expedia, which previously required immediate payment from its customers, argues that the new commission structure is justified because ETP delivers extra value through higher booking conversion rates.
But hoteliers, especially those with a strong domestic customer base now paying Expedia 10% commission for local bookings made inside 28 days and 25% for international sales, remain wary.
With ETP Expedia is asking for 17%-19% commission from properties in primary markets (depending on scale) and 15% for regional properties.
One said: “At this stage we don’t see any value or urgency in taking up their kind invitation”. Another revenue manger said he would not be signing his group.
Meanwhile, Toga Hotels, which owns and manages 54 properties, said it will ensure the scheme is financially viable before proceeding.
“We haven’t got on board yet but are definitely looking at it property by property to see if it works,” said Shaizeen Contractor, Director of Revenue at Toga Hotels.
“As long as it is financially beneficial, of course we would get involved – why not?”
Ms Contractor said Toga will make a decision on ETP within the next couple of months.
Cameron Cunning, GM Revenue at Oaks Hotels and Resorts, said: “We are going to sit on the sideline for a bit. In the meantime we’ll do some lead time analysis to see if it works for us.”
Several of the suppliers TravelTrends.biz spoke with said they got the impression from Expedia that ETP would replace the existing commission structure.
But Expedia’s Managing Director in Australia, Georg Ruebensal, said this is not the case.
“We are offering hotel partners the opportunity to participate in ETP, but nobody will be 'forced' to join ETP,” Mr Ruebensal wrote in an email.
“We trust that the offer is compelling enough and we will continue to work locally with our partners on ensuring a mutually beneficial partnership.
“ETP is being rolled out as we speak and there is no hard cutover as we continuously review what is relevant on a local level.
“Obviously, we are keen to have as many partners on ETP as possible to increase the value for our consumers.”
Expedia said consumer testing has been positive.
“We saw an approximate 5% increase in test markets on conversion in relation to longer length stays,” an Expedia spokesperson said.
“This demonstrates a consumer appetite for post pay options given the higher price tag of longer length stays.
“We can also confirm test markets have seen an overall positive uplift in bookings for those hotels that offer payment options vs. those that don’t."
The spokesperson said "13,000 of our 160,000 global hotels have signed up for ETP in a relatively short period of time.
"We are committed to working closely with our partners to ensure the best outcome for the Expedia customer."