AreYouKiddingMe?

Orbitz, Expedia: Stockholm Syndrome Meets the Web

Not to pile on, but...I'm perplexed. I grow weary of industry talking heads that either don't know what they are talking about or are purposely distorting facts for their own financial gain. While it is obvious that the trend is for direct bookings, we cannot lose sight of the fact that the OTAs play a very critical role in the continued growth in online distribution for the hotel industry, especially for small brands and independents.

This article makes the same arguments from 2001; back when the merchant model was truly out of control. I will spare you the lengthy history lesson but the hotel industry saw the problem back then and responded in kind. They regained control over their brand, pricing, and inventory integrity through initiatives such as the hotel backed joint-venture Travelweb, the initiation of best rate guarantees, and through automation of the merchant model booking process. The merchant model is not the industry scourge it once was due to the collective and visionary efforts of hoteliers that I would not describe as a "web-illiterate" bunch.

That being said, in my humble opinion, one of the larger issues facing the hotel industry today is the proliferation of online marketing companies that have made an industry of convincing hotels to spend thousands of dollars plus commissions per month on PPC campaigns with no expected return on investment. I believe if we line up the cost per booking on an OTA vs the all-in cost with these SEM campaigns plus commissions on top of the other transaction fees, hoteliers may start to think differently about the value proposition these companies really offer.