Social Media and Marketing

By Ashwin Kamlani, president & founder of Hotel Internet Help Inc.First of all, I think there are many people out there that have no idea what affiliates are, or how affiliates operate.

Published: 15 Apr 2010

By Ashwin Kamlani, president & founder of Hotel Internet Help Inc.

First of all, I think there are many people out there that have no idea what affiliates are, or how affiliates operate.

So let’s begin with a brief lesson. For those of you who already know how affiliates work, please skip to the fourth paragraph. An affiliate is someone who re-sells somebody else’s inventory for a commission. So when you sign a net rate agreement with Expedia, your hotel can be sold on Expedia.com, Hotels.com, or literally tens of thousands of other websites on the Internet that re-sell Expedia’s inventory. The Expedia Affiliate Network (previously IAN, or Interactive Affiliate Network) is considered to be the most successful and most robust affiliate network in the online travel business. As of 2009, some estimate that over 30% of Hotels.com’s hotel-only bookings came through affiliates. These reservations usually arrive to the hotel under the name of TravelNow.com. So all of those hotels out there that wonder why they get all these reservations from TravelNow.com but have never heard of the site before, or have never seen a single advertisement for it before… now you know.

Take www.cheaprooms.com, for example. This is one of Expedia’s largest affiliates. They make millions of dollars each year in hotel bookings. Expedia earns between 20% and 30% on each booking, and a piece of that goes to the affiliate that brought the booking to Expedia. How much exactly? Well, the more business the affiliate brings to Expedia, the higher the percentage they earn on each booking. Cheaprooms.com for example, is probably earning 15% on each booking, which means that they are probably earning more on each booking than Expedia is! The high margins that the OTAs have been able to negotiate and maintain with suppliers give them a large enough cushion where they can offer a high percentage commission to affiliates as an incentive to do whatever they can to attract more bookings.

There are literally tens of thousands of these affiliates. Some small, some quite large. The larger ones quite frankly would rather let Expedia handle all of the customer service, transaction processing, and supplier relationships than try to build all that on their own. They’re quite happy just focusing on attracting the traffic and waiting for their check from Expedia each month. By the way, affiliate websites do not have to be exclusively travel related.

Now don’t get me wrong, I’m not saying that affiliates are a bad thing. The problem comes in when the affiliates go un-checked, and some start incorporating shady practices in their efforts to make more commissions. As they gain more volume of bookings, they gain favor with the OTA which they have signed up with which will in turn result in even higher commissions for the affiliate down the road.

Let’s take an example of an unethical practice that an affiliate might attempt in order to increase bookings. They might start using domain names that imitate the name of a hotel, for example, using dashes or misspellings. In some cases they have actually managed to buy the dot-com domain name of the hotel. Some affiliates do this just to capture the consumer… some even go as far as building websites that don’t openly say that it is not the official hotel website so that the consumer will think they are booking directly with the hotel. Of course, a major OTA probably would not try to do this within their own tactical strategy at the risk of being exposed for unethical practices. But what about their affiliates? Who should be responsible for making sure that they act in a way that is considered acceptable among the hospitality industry?

What should you do if you discover that someone is attempting to hijack your direct bookings? Well, the first step is to try to weed out the source of the inventory. Sometimes this can be difficult. Usually just by clicking around in the website you can figure out which affiliate program the website belongs to. In the case of Cheaprooms.com, if you check rates and availability for any particular city, as soon as you click Book Now you’ll notice that the URL changes to secure.ian.com/etc…. This is a giveaway that Cheaprooms.com is an Expedia affiliate. If you can’t figure it out by looking at the URLs that appear when clicking around the site, then make a booking for your own hotel under your own name. When the booking comes in… you’ll know where the affiliate is getting their inventory from.

The next step is to address this issue with the intermediary in question. Unfortunately, the response you get will probably depend on how important you are to the intermediary as a supplier. If you are a small independent property, you will probably get a response like “We can’t possibly control what all of our affiliates do without our knowledge.” If you are Marriott, your complaint will most likely be met with swift action. Unfortunately, aside from that there is little that you can do. If the OTA does not take responsibility for the affiliate’s actions and try to stop it, you could remove your inventory from the intermediary but chances are you are dependent on their production. You could ask the intermediary to remove your hotel from their affiliate network and only sell directly on their site. Keep in mind though that if it is Expedia or Hotels.com we are talking about, this could represent around 30% of their hotel only bookings.

So who are the offenders of this type of behavior? CRShotels.com seems to be a frequent offender of hotel domain squatting. Just before publishing this article, we received a complaint against CRShotels.com in our Hotel Internet Community Crime Watch about the Hotel Bentley in Miami Beach. If you Google Hotel Bentley Miami Beach, the URL www.hotelbentleymiami.com appears on the first page of the natural search results. You’ll notice that this is NOT the official site of the Hotel Bentley in Miami. This, or www.hotelbentleymiamibeach.com which is also a domain managed by CRShotels.com.

For an even more extreme example, go to Google and search for “Haddon Hall Hotel” which is a fairly large property in South Beach, Florida. Notice that www.haddonhallmiamibeach.com appears not only as the first natural listing in Google, but also as the only option in the Google Local listings. The real website of Haddon Hall Hotel is actually www.haddonhallhotel.com. I went to visit the Haddon Hall Hotel and showed the owner what CRShotels.com was doing.

To my surprise, he knew about it already and didn’t seem to care. “We’re doing pretty well,” he said. “Our hotel is full because of all of the OTAs that sell us.” I tried to explain to the owner that while it was great that the OTAs were helping him fill his hotel, he was losing a hefty percentage of his revenues by allowing his direct bookings to be hijacked by third parties. Apparently the owner has invested in SEO activities on two separate occasions with so-called SEO companies that he found on the internet, and so he has given up. This makes me so sad, and I know there must be tens of thousands of hotels out there just like Haddon Hall, with so much potential to boost their business but have given up because they have been scammed by people who claimed that they could help, but didn’t have the industry experience, or the knowledge or tools, or had no intention of helping them in the first place. But I digress…

Hotel Plus, which is an inexpensive booking engine provider also does this frequently. Motel Blu here in Miami uses Hotel Plus as their booking engine provider. Their website is www.motelblu.com. Unfortunately for them, Hotel Plus is running ads in Google for www.MotelBluMiami.com.

Why is this a bad thing? Well… these days many hotels are investing a lot of money into their own websites. This is where you convey to the consumer everything about your hotel. Many hotels are also working very hard to bring those consumers directly to their websites, since their cost of booking the customer through this channel is usually the lowest. So it’s pretty annoying when a travel agency or affiliate is trying to poach those customers by posing as the hotel website, because every time a consumer is fooled into thinking their booking directly it costs the hotel an additional 20% to 30% in revenue.

Don’t think that this practice is isolated to the OTAs by the way. Some of the tour operators are guilty of the same practice. Vacation Store, a tour operator based in Miami is infamous for this and has been threatened by many suppliers because of this practice. The “affiliate” in this case is a marketing company called Media Insights, also based in Miami. Take a look at www.meliacaborealresort.com, www.grandoasispuntacana.com, or www.allegroplayacar.com. These are all domains and websites operated by Media Insights. When confronted about these websites, Vacation Store claims that they have nothing to do with them… but Media Insights went on such a hotel domain squatting rampage that they themselves have lost control of their own mess. Many of the websites still have an e-mail address on them that say vacstore@bellsouth.net. At the time of writing this post, www.allegroplayacar.com still has that e-mail address at the bottom.

The latest company I have found doing this recently is a website called hotelreservation.com. They are popping up all over the internet with domains that use the hotel name, and then they launch a Google adwords campaign around it. I’m still trying to investigate who these guys are but they appear to be linked with a German company called www.ab-in-den-urlaub.de. It is extremely frustrating to see this happening all over the internet. I would encourage all hotels to constantly Google their own hotel names and pay very close attention to who shows up in both the paid listings as well as the natural listings. Make sure you check the Google local listings as well.