Whether to Ask the Hotel or Hit the Web

By MICHELLE HIGGINS

Published: February 18, 2007

WITH more hotels guaranteeing equal or better prices to travelers who book with them directly, online travel agency Web sites like Expedia, Orbitz and Travelocity aren’t always the bargain bins they once were for hotel rates. In response, the agency sites are forced to concentrate on other ways to keep and attract customers.

“It used to be that you would book through an online agency because of the savings,” which for one night “could have been upward of $30,” said Lorraine Sileo, an analyst at PhoCusWright, an online travel consulting and research company.

The cheaper rates often came with stricter cancellation policies and requirements for full payment when booking. Travelers accepted those conditions because the savings were significant.

“That was yesteryear,” Ms. Sileo said. During the travel slump after the Sept. 11 attacks, hotels were eager to work with discount and travel agency sites to fill rooms. But now that the economy is stronger, the hotel companies have been working to cut out the middleman.

If a customer who reserves with Hilton finds a lower rate for the same stay at another Web site in the next 24 hours, for example, Hilton will match the rate and throw in either a $50 American Express gift check or a $50 discount. Marriott and Starwood Hotels also offer rate guarantees.

As another incentive for direct booking, major hotel chains have largely stopped offering loyalty program rewards to guests who reserve rooms at negotiated discounts from the online travel agencies.

The efforts have been working. In 2004, half the $14.5 billion in online hotel bookings with hotel companies based in the United States were made through online travel agencies, and half were made directly with hotel sites, according to PhoCusWright. Last year, 55 percent of the estimated $23.5 billion in online hotel bookings were made directly, with hotels cutting the online agencies’ share to 45 percent.

“Many people are searching online travel agency sites,” Ms. Sileo said, and then moving on to the hotel sites to make their reservations “because they are either getting the same rate or a more flexible cancellation or change policy.”

Rick Leonard, a fund-raising executive from Los Angeles, is one of many travelers who book directly with hotels. But to make sure he’s getting the best price, he still searches online travel sites before contacting a hotel. This way, if he is quoted a higher rate, he can say he saw a lower one on the Web. He calls this “keeping them honest.”

He favors dealing with the hotels directly, he said, because requests for particular types of rooms are more likely to be honored and, if there is a problem of any kind, being in direct communication with the hotel “just makes the chain of responsibility that much clearer.”

Online travel agencies are finding various ways to fight back. Travelocity introduced its own price guarantee last year. A customer who finds a lower rate on an identical reservation within 24 hours of booking can get a refund of the difference and $50 off a future travel purchase. The company also started a loyalty program in October that lets customers with five or more bookings in a 12-month period redeem points for discounts.

Expedia offers a similar price guarantee and loyalty program.

The online travel agencies have also begun to focus on discount packages combining flights, hotels and rental cars in various ways. And they are trying to set themselves apart with new customer services.

Orbitz, for example, introduced a hotel notification service in December for travelers who book flight and hotel packages through its Web site. If flights are delayed, Orbitz will call customers and, with their permission, alert their hotels that they will be arriving late. If a flight is canceled, Orbitz will also rebook customers at new hotels.

So what’s the best place for a traveler to book online? It depends on what matters to you most.

If you want points or preferential treatment, book directly with the hotel. Most major chains deny loyalty rewards to guests who book negotiated rates from online travel agency or discount sites. And even if your hotel doesn’t have a points program, it’s best to book directly if you want to establish yourself as a repeat customer, worthy of favors and extra perks.

“We always recognize customers that are coming back with a small amenity in the room — maybe a bottle of wine or bottle of Champagne — or sometimes an upgrade,” said Jyrki Auvinen, front office manager at the Hotel of South Beach in Miami, which keeps detailed records of guests’ preferences. But because “the information transmitted from a third-party vendor is less than we received from a guest,” he said, customers who book through Web sites other than the hotel’s are typically viewed as first-time guests.

Marriott, which keeps files on requests that guests have made for everything from extra towels to foam pillows, said those preferences might not be automatically honored if a traveler booked through a site other than its own. “When they book on another site,” John Wolf, a Marriott spokesman, said in an e-mail message, “only the details absolutely necessary to facilitate the transaction” are shared.

If price is your main concern, it pays to shop around. Travel agency sites offer quick comparisons across hotel chains. And they tend to offer good bargains on independent hotels, which may not have the resources to offer real-time online booking themselves, said Henry H. Harteveldt, a travel analyst at Forrester Research.

If your trip requires more than just a hotel stay, travel agency Web sites can often offer savings through packages that include flights or car rentals. But the online agencies are not ideal for customers who are tied to particular hotel brands.

“If you’ll only stay at St. Regis hotels, for instance,” said Michelle Peluso, chief executive of Travelocity, “you’re probably better off going to their site.” She said people go to Travelocity because of its breadth of offerings like package deals, a variety of hotels and customer reviews of hotels.

But you can still use a travel agency site to get a better rate from the hotel directly. If a call comes in from a guest who found a better rate on another site, said Mr. Auvinen of the Hotel of South Beach, any hotel is likely to match it.

“It’s just common sense,” he said. “I have yet to meet a hotel general manager that would say, ‘Don’t match the rate.’ ”

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