Posted May 12, 2016

GUEST: CWT's Eric Jongeling On Hotel Book-Direct Initiatives

Carlson Wagonlit Travel ‎director of hotel solutions Eric Jongeling doesn't expect managed travel programs to be severely impacted by book-direct campaigns enacted by Hilton Worldwide, InterContinental Hotels GroupHyatt Hotels Corp. and Marriott International. While those hotel companies intend to make special loyalty member rates available to third parties, Choice Hotels on Tuesday announced that its new program rates, effective this summer, will be sold "exclusively" on its website and mobile app. Still, Choice "will evaluate expansion to travel agents." The following are Jongeling's views, as told to The Beat.

This is really about the hotel chains going up against the online travel agencies. The overall reasons behind their decisions: The hotels are trying to bring more business in through their loyalty programs and offset the fees that they pay OTAs.

It started with Hilton, and then everybody followed suit, one after the other. Hyatt started down a different path [with plans to exclude preferred rates from global distribution systems], but they recently backed off. Much will depend on Choice’s final direction. My guess would be that they will ultimately align with what the other chains have done in allowing TMCs access. There is still toggling going on behind the scenes to make sure that travel agencies have priority in terms of what's being offered to travelers. But the way each of these hotel chains has rolled it out does seem very similar. It also seems they rushed to do it without thinking about some of the potential miscommunication that could occur after the fact.

When discussing this with hotels, they'll say the intent was not to create this confusion for travel agencies; it is directed at the OTAs, and they don't want to ruin the partnerships they have with TMCs by not giving access to the best rates.

Hotels have told us that booking with a TMC like CWT is going to mean getting the best rate available at all times. If those rates go down, for the majority of the chains that we work with, there are actions in place to ensure the rates that our customers pay are never above those best available rates. There really should not be an impact on the rates that corporate clients pay.

There is a little bit of a lack of transparency, and that creates a level of confusion for travelers. It does create an element of doubt in a traveler's mind. They may say, "Oh, I can get this rate on the hotel site versus what is negotiated by my company," without really understanding what's included.

Behind the scenes, managed travel professionals are trying to figure out: How does it impact us from a managed travel perspective? What are the hotels providing in terms of loyalty discounts directly versus through a TMC partner?

Travel managers and TMCs will be paying attention to what is being booked outside the TMC process and what that does to travel volumes. Also, what does this mean in terms of negotiation leverage? If there is more unmanaged spend, are you harming the program longer term?

But leverage can work the other way. Not to do a pun, but it sets the BAR a little bit differently. It sets a different [best available rate] and if you're measuring what kind of discount you're getting, you can say, "This is what a rank-and-file loyalty member gets, what does it look like for someone who is sending you 2,000 room nights a year?"

So, while I don't think these initiatives compromise the integrity of managed travel programs, there's a gap in communication. A lot of TMCs wish the hotels' communications would be clearer, especially regarding the lack of impact on travel management.

Posted by: Eric Jongeling | More by Eric Jongeling

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