Expedia Inc.’s partnership with Red Lion Hotels Corp.,
which allows Expedia users to sign up for Red Lion’s loyalty program and access
member-only rates, was described by one analyst as a “classic win-win.” The OTA
can offer the lowest rates available, and Red Lion can bolster the ranks of its
Hello Rewards program.
It also likely won’t be the last deal of its kind. Expedia
has said it is in talks with other hotel chains to potentially offer
members-only loyalty rates on Expedia sites.
Under the partnership, U.S. users of Expedia.com and
Hotels.com will be presented with several booking choices when they’re booking
Red Lion hotels (Hotel RL, Red Lion Hotels, Red Lion Inn & Suites,
GuestHouse and Settle Inn).
Melissa Maher, senior vice president of Expedia Inc.’s
global partner group, said users will see the option to book a standard room or
a membership-rewards room. The membership-rewards rooms have member-only rates
normally reserved for Hello Rewards members, as well as Hello Rewards benefits such
as a free night for every seven stays.
If users choose the Hello Rewards room, they will sign up
for the program and receive the lesser rate.
“The nice thing for Red Lion is they’re growing their
membership program, and they’re also utilizing Expedia as a
customer-acquisition channel,” Maher said.
Bill Linehan, chief marketing officer with Red Lion, said
the chain treats Expedia as a place “to, essentially, fish where the fish are,
and incorporate their channel as part of our distribution and channel-management
mix. … We wanted to embrace them because of their vastness as a mass merchant.”
Expedia is able to test a program such as this and also give
the consumer full benefits, according to Maher.
Chris Anderson, an associate professor at Cornell University’s
School of Hotel Administration, called the partnership a “classic win-win,” and
he predicted that at least short term it will grow Red Lion’s volume.
That has proven to be true so far. Since the program went
live about a month ago, Red Lion has seen about a 400% increase month over
month in Hello Rewards sign-ups. About 25% of that has resulted from the
Expedia partnership, Linehan said, with the remainder coming from the chain’s
Anderson said Red Lion’s size was also conducive to a
partnership such as this, as Expedia is less likely to lose its customers to
Red Lion in the future based on its relatively smaller national footprint (it
has 114 properties in the U.S. and Canada).
Maggie Rauch, senior research analyst at Phocuswright,
agreed, asserting that it’s harder for a smaller chain such as Red Lion to
attract bookings, so the partnership would likely be a boon.
“As consumers shift and travelers shift to purchasing on
mobile, it gets harder for hotel companies, particularly small chains or independent
properties, to attract direct bookings,” she said. “Because if you’re looking
at an app, it would be a very small number of travelers who would have the Red
Lion app on their phone. By comparison, Expedia’s app is something you might
Additionally, travelers are increasingly using OTAs to book
hotels, Rauch said. According to Phocuswright research, in 2014, 30% of
consumers said they booked hotels on OTAs vs. 27% using hotel websites. That
gap widened in 2015, with 34% using OTAs and 23% using hotel websites.
Rauch said that shift comes largely because of the growing
strength of mobile booking, as well as the Priceline Group’s Booking.com, which
is getting stronger in the U.S. and making the OTA-hotel space more