Wednesday, May 23, 2007

Travolution@E4T - Expedia could charge suppliers for leads

Mild rumblings of discontent this morning at the EyeForTravel conference in London when Expedia said online travel agencies may have to take action as more of those pesky consumers are using the site as a search engine and then make a booking direct with suppliers.

Murad Hajeebhoy, vice president for lodging and destination services, said their could be a situation in the future when OTAs would consider charging suppliers for referrals.

"This is one of the possibilities" and, of course, is purely hypothetical, Hajeebhoy assured us after his Q&A session.

Needless to say, Expedia and other online travel agencies would certainly have some tricky conversations with suppliers if it decided to implement such a scheme.

Chris Silcock from Hilton, during the session, didn't appear too keen, to say the least...

Hajeebhoy said he was unclear as to how such a system would work - complicated tracking for cost-per-acquisition or a cost-per-click system?

It is very interesting that Expedia is at least thinking about this model. But what does it say about their motivation?

Are the OTAs finally acting because a huge amount of traffic is coming but so little is converting?

Kevin May, editor, Travolution

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Anonymous said...

Interesting. Should metasearch engines start showing a bit of metaphorical leg to a potential suitor?

David Ourisman said...

Consumers are catching up with what expedia is up to... putting pre-paid options (with NET pricing) at the top of the list of choices, hiding booking fees within the "taxes and fees" line item, and even charging cancellation fees. If expedia wonders why people "visit" but "play" elsewhere, perhaps they should reconsider their business practices. They already get commissions from the hotels; corporate greed tends to backfire.

Travel Insider said...

At the moment it would appear that adopting an advertising model for major brands could be more attractive than actually transacting since your at a stroke transfer the conversion risk to the supplier. However, is this sustainable? Already I'm questioning price comparison meta tag sites because the cost of advertisng only goes in one direction i.e up and margins due to price competition between advertisers go in the opposite direction.

Intersting choice though?

Steve Endacott

- A said...

I hear more and more about the hidden fees. When you compare the bottom line with the direct rate, there may be a difference even when the room rate is supposedly the same. Consumers need to step through the process even further to get the whole rate and not just the room rate.