There’s a new breed of online hotel deals generating considerable buzz. How do these “twists on traditional practices” work and what do they mean for hotels’ relationships with online booking sites? We’ll look at two new programs—one rewards travelers for moving quickly and the other rewards delayed decisions.
Acting Fast Pays Off…
Launched this summer, HotelTonight’s Today’s Daily Drop is aimed squarely at millennials and makes use of gamification. This unique take on opaque (price-hidden) deals is a once-a-day, 15-minute opportunity. According to HotelTonight's CEO Sam Shank, “Deals are personalized to the booker’s taste and often at prices that are better than opaque sites.”
Writing for fastcompany.com, Rina Raphael describes Daily Drop as a “more rewarding experience for users looking to snag the ultimate deal.” Stays can be booked up to 100 days in advance, and they’re non-refundable.
“Users have to swipe within the app to unlock the deal, and if they don’t book it within the 15 minutes, with a clock clicking down toward zero, then the deal is gone,” explains Dennis Schaal in a July post for Skift.com. After that they can book another hotel at its regular price or wait for the next day’s 15-minute deal. HotelTonight offers properties in the Americas, Europe and Australia.
Conde Nast Traveler quotes Shank as saying; "This is redoing opaque deals for the mobile era.” Today’s Daily Drop is a bit more transparent than typical opaque deals, which reveal the hotel after guests have completed their purchase. He explains, "This is the same discount than you'd find in normal opaque deals, but you know what you're getting into." Approximately 1,000 properties participate in Today’s Daily Drop.
And So Does Acting Slowly
The next new offering is Expedia’s Add-On Advantage, which was unveiled last year. “Packages are still a great way to save, but we recognize it isn't always the easiest or most convenient way for travelers to book. A recent study shows more than 40% of people prefer to book their flight first,” said Aaron Price, Expedia senior vice president of Global Marketing.
Expedia customers booking a flight, car or package are now able to add a discounted hotel room up until the day of their trip, and those accommodations (and the rates) can only be seen after they book the other components of their trip. Expedia reports that customers get discounts up to 43 percent.
Noting that travelers want to research neighborhoods, amenities and reviews, Price said, "Our rationale for the Add-On Advantage is really an adjustment to our current offering with the aim to better serve travelers.”
Add-On Advantage lets travelers spread out the cost of their trips, which makes them easier to budget and may also reduce credit card interest. And, by booking separately, Expedia customers can book flights and hotels when they’re the cheapest—earlier for flights and later for hotels. According to Expedia, Add-On Advantage saved customers nearly $40 million in 2017.
Is this Good or Bad for Hotels?
“Hotels are obsessed with getting this kind of traveler,” Shank said, noting that most of 29 million downloads were to millennials’ phones. “These types of customers are experience-driven, not price-driven. They really like the amenities—the bar, the rooftop, the pool—and they are great customers. And of course, they are very social media-adept. They provide free marketing in a sense.”
HotelTonight found “hotels are keen to partner with the app on the new service–offering uncharacteristically discounted prices–in hopes of accessing younger audiences.”
Expedia Group CEO Mark Okerstrom believes the value for hotels in the Add-On Advantage program is that it’s “incredibly targetable,” noting that hotels have “the ability to, in a very specifically fenced way, to target customers, not out in the open, but to target customers that we know are going to a certain place with a special deal.”
Not everyone is seeing the benefit for hotels. In a piece titled, Taking Advantage: Expedia’s New Package Approach Could Upend Distribution, Patrick Bosworth CEO & co-founder of Duetto, says, “These ‘packaged’ rates could seriously degrade a hotel’s brand by going from an opaque component of a bundle to a searchable price that consumers can compare with other properties’ rates.” While he acknowledges that the discounted rates are “gated,” he’s concerned that “the hotel can’t control who can find those rates.”
Opaque rates have been around for a while and these two programs are the latest iterations. Time will tell if hotels gain more loyal millennials customers and if that benefit outweighs the impact of the deeper discounts, whether they remain fenced in or become more public.