BELLEVUE, Washington—The opaque rate program offered by online travel discounter Hotwire.com is now available from the website’s parent company, Expedia.
The company is currently in talks with the more than 25,000 hotels participating in the Hotwire program about also potentially being on Expedia, too, said Expedia Partner Services Group’s director of revenue management Jay Hubbs during a telephone interview. He declined to say specifically how many hotels are currently listed.
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Jay Hubbs |
Participating hotels are located in the United States, Canada, Mexico, Europe, Australia, New Zealand and Hong Kong. “We’re working closely with all of our partners and making sure they’re comfortable with the product,” Hubbs said. Expedia made the opaque rate offering available on Expedia about four months ago but only made the public announcement Monday as the company chose to test the program quietly first.
The opaque rate model is so called because travelers book the discounted rate knowing only the star rating, amenities and location of the property. The name of the hotel is revealed only after the room purchase is made.
Such a model is attractive to some hoteliers because it allows for discounting without compromising retail rates. However, the practice of discounting rate through online travel agencies, such as Expedia and others, has come under fire from some hoteliers who claim the OTA practices contributed to the suppression of rate during the downturn.
“We have now created an entire industry whose primary purpose is to drive our pricing down,” STR CEO and co-founder Randy Smith said 8 October during a keynote address at the Cornell Hospitality Research Summit. “People say, ‘I didn’t stay at a Marriott or Holiday Inn, I stayed at an Expedia hotel.’”
Hotels will continue to provide rate information to Hotwire; the final pricing and display information for the opaque rates will also continue to be managed by Hotwire.
Approximately 2 million people per day shop Expedia, the company said in a news release.
The company opted to expand the program in part because of feedback from hoteliers who indicated a desire to diversify distribution channels, Hubbs said.
“Occupancy and rate have been coming back lately,” he said. “Hoteliers are trying to figure out how to yield channels as best they can.”
The U.S. hotel industry’s occupancy increased by 6.7% to 63.9% during the third quarter while average daily rate went up by 1.6% to US$99.07, according to STR data. Revenue per available room jumped 8.4% to US$63.34.
Recent other opaque offerings by competing sites, such as Travelocity, also provided impetus to Expedia to beef up its own model. Leveraging Expedia’s brand recognition in the consumer marketplace will help the model succeed, Hubbs added.
“It helps us compete in the opaque space,” he said. “There is certainly room in this area for a lot of different players.”