After pushing book-direct to squeeze OTAs, hotels offer incentives to agents

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More than 40% of bookings at Preferred Hotels & Resorts come through a GDS. Pictured, the Franklin Hotel London.
More than 40% of bookings at Preferred Hotels & Resorts come through a GDS. Pictured, the Franklin Hotel London.

In the eyes of travel agents, hoteliers appear to be increasingly divided into “they love me” and “they love me not” camps.

Among the former is JDB Fine Hotels & Resorts, which pays agents two percentage points above the typical 10% commission and offers perks such as arranging for a private boat to pick up clients from the airport when visiting Venice.

Meanwhile, Marriott International would fall into the “love me not” category, at least for members of the Travel Leaders Group agent consortium. Marriott, the largest U.S. hotel company, is one of a number of hoteliers that have recently stepped up efforts to sway potential guests away from OTAs and toward direct bookings, but it is the only one of the four largest U.S. hotel companies — the others being Hilton, Hyatt and Starwood — that does not participate in the consortium’s Worldwide Hotel Program.

“The larger hotel companies are being more aggressive with direct-booking efforts, but we’ve seen hotel companies with a parallel strategy to ensure agents bring business to hotels,” said Erick Rodriguez, senior vice president of Travel Leaders Group’s hotel division. “It varies across the board.”

Indeed, there has long been a broad spectrum of approaches taken by hotel companies to either maintain or boost travel agent-based hotel bookings, ranging from the basic, commission-only policies of ower-end or moderately priced chain hotels to fam trips, guaranteed upgrades for clients and other perks meted out by luxury hotels that are either independently run or part of smaller chains.

With the largest hotel operators shifting much of their marketing dollars toward getting prospective guests to book direct and U.S. hotel-room demand growth heading toward a plateau, the spectrum appears to be evolving into more of a line that separates hotel companies that are redoubling their efforts to widen the travel-agency sales channel from those that aren’t.

Much of the agent-friendly contingent is represented by marketing specialists representing independent properties and smaller chains. JDB is a New Jersey-based marketing and reservations company that represents about 100 independent European hotels and conducts 100% of its business through travel professionals.

The Motif Seattle is managed by Destination Hotels, which offers special rates on its travel agent portal.
The Motif Seattle is managed by Destination Hotels, which offers special rates on its travel agent portal.

Larger still is Preferred Hotels & Resorts, which represents more than 650 hotels worldwide, including the Sagamore in upstate New York and Paris’ Hotel Mayfair, as well as smaller luxury chains such as Montage Hotels & Resorts’ five U.S. properties.

More than 40% of Preferred Hotels’ reservations are made through a GDS, while younger, more independent travel agents who regularly book directly through Preferred Hotels’ website are estimated to account for another 20%, according to Rick Stiffler, the company’s vice president for leisure sales.

As for chains, their efforts to gain travel-agent bookings tend to coincide with their price points: The higher the hotel company’s typical rates, the more perks they try to shower on the agents and agents’ clients. That trend is best illustrated by Select Hotels & Resorts and the Worldwide Hotel Program, both of which were launched in 2014 by Travel Leaders Group.

Under Select, which includes more than 700 hotels worldwide, ranging from independents to smaller luxury chains such as Peninsula Hotels, qualifying travel agents can generate perks for their clients such as early check-in, free breakfast (which can be expensive at resorts) or a free bottle of wine or spirits. What’s more, they can sometimes generate a higher commission rate than the standard 10%.

Meanwhile, the Worldwide Hotel Program includes about 33,000 hotels worldwide, ranging from upper-upscale chains such as Hilton and Hyatt’s flagship brands to limited-service chains such as La Quinta. In addition to 10% commissions for agents, clients can get free WiFi, free breakfasts and, sometimes, discounts off the best available published rate, Rodriguez said.

Paradoxically, Marriott was a key player in the concept of expanded travel-agent perks, via its Ritz-Carlton Stars program, which was launched in 2002.

“They were so successful that Four Seasons and Belmond [then Orient-Express] copied it,” said Jack Ezon president of New York-based Ovation Vacations, a member of the Virtuoso consortium. Ezon also named Four Seasons, Rosewood Hotels & Resorts and the Dorchester Collection among luxury hotel chains that continue to increase agent perks.

Now, Marriott’s acquisition of Starwood Hotels & Resorts has the hospitality industry and agent channel buzzing with speculation about how Starwood’s SPG loyalty program will be integrated into Marriott Rewards.

Additionally, Destination Hotels, the resort operator that earlier this year merged with Commune Hotels & Resorts, parent of Thompson Hotels and Joie de Vivre Hotels, recently relaunched its website with a travel-agent portal that provides special rates and contact and GDS code information.

As Destination and Commune continue to integrate, the aggressive sales approach with travel agents taken by Destination properties, such as Southern California’s Terranea and Santa Fe’s Inn and Spa at Loretto, will likely be expanded to the former Commune properties as well, according to Leslie Kaminski, Destination Hotels’ global director of travel industry.

“The OTA model is a totally different business model that’s not really loyal,” Kaminski said. “We want more bookings from the agents, and we have a huge sales team for corporate and leisure travel that’s constantly on the road.”

Such hotel companies and representatives are widening their efforts to a travel-agent contingent whose booking growth rate is expected to parallel the overall industry’s growth. In 2014, travel agents and travel-management companies accounted for 28% of the U.S. travel market, compared with 28% for supplier-branded websites and 16% for OTAs, Phocuswright reported earlier this year. That market share is expected to remain steady through 2017.

Still, that’s largely because of additional efforts from the cruise industry to curry agent business, implying that travel professionals’ sway over other sectors such as lodging and airlines could be declining slightly.

Meanwhile, both consolidation within the hotel industry and increased efforts by the largest hotel companies to divert reservations from OTAs and toward direct bookings have many agents concerned about how much attention they’ll continue to get.

Since the beginning of the year, hoteliers including Marriott, Hilton, Hyatt and InterContinental Hotels Group have either launched or expanded programs that offer discounts and other perks to loyalty members who book direct. The programs have received some pushback from the agency channel because of lack of clarity over whether loyalty members who book through agents are eligible for such perks.

The Terranea Resort in Southern California is part of Destination Hotels, a company that aims to get more agent bookings.
The Terranea Resort in Southern California is part of Destination Hotels, a company that aims to get more agent bookings.

“A lot of time, you’ve got two different marketing organizations working on their approach to customer acquisition, so they may not have the best marketing and PR around our business,” Rodriguez said. “Sometimes they have to backtrack.”

Additionally, two relatively agent-friendly hotel operators, Starwood and Fairmont Hotels & Resorts, have been swallowed up. AccorHotels in July completed its $840 million acquisition of Fairmont’s parent, FHRI Hotels & Resorts.

Meanwhile, Marriott’s $13.6 billion acquisition of Starwood has much of the travel industry questioning the fate of Starwood’s SPG loyalty program and the future of Starwood’s agent relationships.

Still, other companies continue to step up their agency sales efforts, especially as recent economic signs point to a flattening of demand for U.S. hotel-room growth after six-plus years of steady increases.

Ezon observed that within the past month or so, Oetker Collection and Shangri-La Hotels and Resorts each added travel-agent perks programs, including a guaranteed response to agents from the hotel companies within two hours of an inquiry and guaranteed upgrades for clients.

Meanwhile, Travel Leaders Group about a year ago added a third tier to its hotel partnership program called Enhanced, which now includes 55 hotels including the Blakely New York and offers perks such as higher commissions for agent bookings.

Still, Ezon said that the independent luxury hotel operators continue to be the most aggressive and effective in ensuring continued agent bookings by taking the personal approach. He cited Hotel Santa Caterina on Italy’s Amalfi Coast as a prime example, noting that the hotel owner personally greets his clients upon every stay and almost always provides a room upgrade.

“Every front-line agent is trying to keep relevant,” Ezon said. “In order to do that, they always need to look like a hero.”

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