Expedia-Red Lion partnership touted as ‘win-win’ scenario

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The Hotel RL Baltimore Inner Harbor by Red Lion.
The Hotel RL Baltimore Inner Harbor by Red Lion.

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 website.

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 have.”

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 competitive.

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