I have a confession to make. I booked a hotel room at hotels.com a couple weeks back. I’m not proud.
It was marathon weekend in Cleveland—20,000-plus people in town to run—and the Cleveland Indians were at home and the Cavs were potentially hosting Game 1 of the NBA Eastern Conference Finals.
The city was compressed. I had signed up to run the half marathon long ago and was still debating whether I was actually going to do it and never booked a room for the 7 a.m. race Sunday morning. It was the Monday before, and I finally decided to run (the 10K — I downgraded). I would have needed to leave my house in a suburb west of the city at 5:15 a.m. and then hope to find a parking spot to be there by the recommended 6:15.
When OTAs are the Only Channels Left Open
I was desperate for a room. The marathon room blocks at all the hotels throughout Cleveland were sold out, of course, and only a few properties had any availability—at New York City-like rates of $500, a tad more than I was willing to pay to run at the crack of dawn. Kudos, though, to those properties for properly managing supply and demand to capitalize on people like me who really needed a room (remember, hotel revenue management isn’t anti-consumer).
Anyway, my choices were either downgrading out of the race altogether and wasting the $100 registration fee and feeling even lamer than I already did, or staying at home and waking up at 4:30 to run the race. I figured I’d try the online travel agencies on the off chance there was a hotel I hadn’t searched directly that might have had a room. Yeah, I’m proof there’s still some Billboard Effect.
To my surprise, at the top of the search results at hotels.com was a new branded hotel—open just a week—showing it had one room left. At $200, for a suite! And the hotel was in the perfect spot, a block from the race’s finish line and a few blocks from the new barbecue restaurant I really wanted to try the night before (maybe a training problem?). It was also a cool adaptive reuse in a funky old building.
[bctt tweet="Why @Eric_Stoessel, who should know better, booked a #hotel room with an OTA"]
That couldn’t be right, I thought. I quickly opened another browser and searched directly at the hotel. No availability. I flipped back to the OTA and refreshed. Still there. I booked as fast as I could pull out my credit card. I was still nervous. Could it be a mistake, might I show up and end up without a room? I got the email confirmation minutes later.
That Saturday, the hotel had my room—a suite, perfect for my wife and daughter who joined me—and we had a phenomenal stay, my first at this brand. I got my barbecue, I ran slowly and we had a little staycation in Cleveland. It was worth a lot more than the $200 I paid for the room at hotels.com. In all my travels, I think this might have been the first room I’ve booked through an OTA.
Direct Bookings: The Optimal Hotel Distribution Strategy
Had I seen the room available at the brand’s website, for $300, I’d have paid and never even checked the OTA. In reality, the hotel should have been charging $400 or $500 and would have gotten it from someone willing to pay that rate.
How could something like that happen? The hotel literally opened the week before. Maybe it wasn’t ready for this unique weekend of demand in Cleveland (read this to understand the challenge and some tips on forecasting demand for a one-time event). I also know it’s not easy forecasting if you rely only on historic information, which can be a challenge for a new hotel without any history.
Certainly I’ve been in the hotel industry long enough to hear about these things happening, and I understand the distribution challenges hotels face. I asked Duetto co-founder Marco Benvenuti to explain to me how this was possible. Heck, not only did he create the algorithm powering our hotel Revenue Strategy technology company, but he also used to work for Expedia (which owns hotels.com).
He laughed. This isn’t unusual, he said. And it’s killing the hotel industry. The hotel probably loaded the rooms on Expedia’s extranet and forgot to undo that—or couldn’t because of technology challenges. The mistake, or worse, the hotel’s reliance on OTAs for distribution was to my benefit. Not only did the hotel miss out on yielding up a higher rate (the benefits of real-time Open Pricing), it also paid a healthy commission to Expedia for my booking.
The hotel did a great job on property. The service was excellent, from the assistant general manager who helped check us in and then remembered me the next morning when he cleared our table during the free breakfast to the woman who checked the ingredients in the popcorn (my daughter has a peanut allergy) to the friendly security guard who asked us how our stay was and made us feel at home. The room was spacious and clean, and I loved the classic Cleveland photography hanging on the walls.
I’ll be back to this hotel, and I’d consider trying the brand outside of Cleveland. I’ll try to book it direct next time. But I’ll check the OTAs first to make sure there’s not a significantly better deal out there.