SOUTHLAKE, Texas -- Sabre Exclusives, Sabre's year-old merchant
hotel program in which travel agencies and the GDS vendor split the
markup, is off to a slow start.
Some 14,000 agencies in the U.S. and Canada have access to Sabre
Exclusives rates, but only 3,800 firms made bookings during the
first four months of 2003, according to Ninan Chacko, Sabre's vice
president of emerging business.
During that same period, agencies sold 37,000 Sabre Exclusives
room nights.
As of April 30, 1,100 hotels in 135 cities were bookable via the
program. On average, hotels are marked up 25% to 30%; agents
receive their share in the form of a 10% commission on the merchant
rate and Sabre gets the rest.
The revenue split is about 60-40 in Sabre's favor, said
Chacko.
Most agencies making bookings, he said, are Sabre's smallest
customers -- firms that generate less than $10 million in sales.
Among Sabre's larger clients, agencies with predominantly corporate
business, bookings are few.
When asked if corporations are hesitant to buy merchant
inventory because rooms are saddled with prepayment requirements
and cancellation penalties, Chacko said he didn't think so.
On the contrary, he said, corporate travelers want these rooms, but
it's the agencies that are hesitant to sell them -- even though
these same travelers are enticed by similar rates on sites like
Expedia, Hotels.com and Travelocity.
"My sense is that agencies in general tend to be more
conservative on behalf of their customers, even when customers are
willing to deal with the restrictions," Chacko said. "I feel it's
one of the largest barriers for the program. The agency community
is somewhat hard to change."
He added that agencies don't sell many retail hotel rooms via
the GDS, a trend Sabre would like to reverse. For every 10 air
bookings, agents make one hotel booking, Chacko said.
"I'd like to see that ratio come down from one in 10 to one in
three," he said.
Henry Harteveldt, senior analyst at Forrester Research, agreed
that agencies don't do a great job selling hotel rooms.
"Sabre agencies are service-oriented and demand-responsive, not
push-oriented," he said. "One hotelier told me, 'American Express
can't move 10,000 room nights for me like Expedia can.' "
Even if agencies stepped up their production, hotels are wary
about offering too many discounted rates to business travelers,
said Harteveldt.
"It's ironic," he said. "One of Sabre's biggest strengths --
access to business travelers -- is one of the hotels' biggest
concerns. Hoteliers are scared to death that Sabre Exclusives will
cannibalize what corporate business they have [coming through the
GDS]."
Harteveldt added that most hotels would like to limit the number
of partners to whom they sell net rates.
A typical hotel chain makes about 4.7% of its inventory
available to merchants, said Harteveldt, and when the economy
improves, that percentage will drop. Travel sellers that move the
most inventory will be first in line.