Choice not ready to “literally give up control of its inventory and pricing”

Oct 23, 2009

Choice Hotels has reportedly mentioned that online travel company Expedia “wanted Choice to literally give up control of its inventory and pricing and wanted to penalise franchisees who did not give Expedia 100% access all the time.”

Published: 23 Oct 2009

Choice Hotels has reportedly mentioned that online travel company Expedia “wanted Choice to literally give up control of its inventory and pricing and wanted to penalise franchisees who did not give Expedia 100% access all the time.”

The two companies haven’t been able to finalise an agreement on the terms of a new contract.

In an interview with Hotels Magazine, Choice CEO Steve Joyce said, Expedia is asking for last room availability whereby it will have access to the entire hotel’s inventory during both periods of market strength and weakness. “And, oh by the way, they said we can never offer a price anywhere we don’t offer to them… They would no longer be our supplier—they would become our revenue manager,” added Joyce.

According to the same report, Joyce says Choice has a multi-pronged plan at this stage and this includes increasing advertising immediately, e-mail campaign to reward members, expand affiliate marketing programme with increased incentives to drive consumers directly to the Choice site, launch an advance-purchase rate programme now instead of next year and strengthening the best Internet rate guarantees to make them more attractive among others.

Choice is concerned that they will still have to offer rooms to Expedia (at the standard margin) even when the hotel is expected to sell out, depressing yields. In contrast, Expedia’s concern focuses around providing consumers with inventory at all times, not just when the hotel “needs” business - it is about product consistency, pointed out Hudson Crossing. It added that Choice would also prefer not to offer Expedia all rate plans and programmes - possibly to allow special rates or packages on their branded websites etc. Obviously, Expedia would like to always have competitive pricing in order to keep consumers coming back in a hyper-price competitive marketplace.