Hawaii hoteliers mull effect of Classic, Pleasant deals

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HONOLULU -- The sales of Hawaii's two largest package wholesalers, Classic Custom Vacations and Pleasant Holidays, have hoteliers here divided over whether the changes present opportunity or uncertainty for the market.

On Dec. 31, the AAA auto clubs of Southern California and Northern New England took 100% control of Pleasant Holidays, and AAA's Tim Irwin became its president.

And in January, Classic Vacation Group disclosed the sale of Classic Custom Vacations to Expedia, a transition that should take about 60 days.

Both wholesalers vowed to continue unbiased relationships with travel agents even though they are owned by entities that compete with those same agents.

Hawaii hoteliers are divided over how the sale of Classic Custom Vacations and Pleasant Holidays will affect the Hawaii market. Above, bike riding on Kauai. On the positive side for Hawaii, hoteliers here said both Expedia and AAA will be able to give Classic and Pleasant more and better tools to market themselves and the islands.

At the same time, some hoteliers said they're not sure how their relationships -- and those of travel agents -- will fare with the new ownerships in the long run.

"From a hotel's perspective, what I'm assuming it will do is give us more exposure," said Sally Proctor, regional director at Premier Resorts.

"From an agent's perspective, I wonder if the Classic name will continue to stand for the service it has in the past now that it has been combined with Expedia, which is its polar opposite," she said.

"You've joined Expedia, which is a do-it-yourself Web site where you can get a cheap rate with Classic, which is a company that prides itself on service.

"It will be very interesting to see how both Classic and Pleasant mesh the two perspectives or if they try to act like they are not related," Proctor said.

Kelvin Bloom, executive vice president of Aston Hotels in Hawaii, said the fact that Expedia and Classic are polar opposites will work to their advantage, because the combined companies will have access to more than one distribution channel.

"Expedia caters toward a customer base that is more value conscious, and Classic is focused on the higher-end product," said Bloom.

"Each party brings several things to the table that the other doesn't have."

Bloom said it will be "fascinating to watch those two different cultures integrate and develop, but I believe it will be a pretty good marriage."

Proctor said she is not sure how Classic's relationship with people in the Hawaii hotel market will turn out.

"Classic always has been a firm that prides itself on service and always has let the hotels know if there's a problem with service... as a result, that has made us better hoteliers, but I'm not sure if that will continue to be the case," she said.

Other questions to consider, said Proctor, are:

•Will Expedia have a separate Web site for agents?

• How will both wholesalers deal with the perception that they are unbiased toward agents when they are owned by competing agencies?

"There's a lot of suspicion out there if someone in both cases is getting a better deal," said Proctor. "It makes it awkward."

Bloom said he doesn't expect to see Aston's amount of revenue from online retailers such as Expedia increase in the future because "our primary focus has always been and continues to be travel agent-driven."

The percentage of revenue Aston receives from online travel agents is in the "single digits," he added.

As for Classic, Bloom said he doesn't see the wholesaler moving away from its travel agent focus "because [its] entire business model is based on that."

"Expedia wouldn't pay millions of dollars and then change the fundamental model its business is based on."

Howard Dunaier, director of Hawaii wholesalers for Hyatt Resorts and Spas of Hawaii, said he believes the sales of both Classic and Pleasant represent nothing but good news for the market.

"My opinion is that both sales are outstanding," said Dunaier.

"There isn't any reason that these companies can't run independently of their owners."

Dunaier said that in Pleasant's case, "They can't survive just off business from AAA, so their commitment to other agencies will be even stronger in order to prove they are not playing favorites with AAA."

He also said there are enough major players in the Hawaii market besides Classic and Pleasant to keep the playing field level.

Rodahl Leong-Lyons, director of sales at the Hyatt Regency Waikiki, said she sees no changes in store at Pleasant.

"I absolutely trust them," said Leong-Lyons.

"They are lifetime business partners, and I don't think [Pleasant founder] Ed Hogan would have sold the company if he knew AAA was going to operate it differently.

However, she said she didn't know what to make of the Classic-Expedia deal.

"What's different is that Classic only deals with travel agents, and Expedia deals mostly with consumers and cuts out the travel agent.

"For us, the only thing that might change with Classic is how we do our cooperative marketing with them, but what we can't control is what the agents are thinking about this whole move and whether they will keep buying through Classic."

Leong-Lyons said those in the Hawaii hotel industry are waiting to see what Expedia's long-term plans are and whether they plan to buy more wholesalers.

"But Classic is not telling us anything," said Leong-Lyons.

"Pleasant is always giving us updates, but we haven't heard anything from Classic other than what is in the press."

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