InterContinental Hotels Group, is adopting a new standard for its portfolio of brands…
InterContinental Hotels Group, is adopting a new standard for its portfolio of brands,
representing more than 3,500 hotels, for selling or re-selling hotel room
inventory via all online travel companies. The new standard becomes
effective on 20 May 2004 and was unanimously endorsed on 16 April 2004 by
the IAHI, the most established independent franchisee association in the
industry.
The standard directly addresses a number of problems that IHG`s guests and
hotel owners are experiencing with some online travel companies.`We have
been discussing these problems for some time and believe several
distributors are working hard to alleviate the situation. However, it is
important that we ensure the business practices of all our online
distribution partners are in line with our core values,` stated Peter
Gowers, executive vice president Global Brand Services.
The new standard commits IHG to working only with distributors and their
affiliates who do not engage in confusing and potentially unclear marketing
practices, who clearly present taxes and fees to consumers, who respect
IHG`s trademarks, and who ensure reservations are guaranteed through an
automated and common confirmation process. The new standard also ensures
that hotel owners are able to provide the best available rate, realise
efficiency gains from the Internet which they can reinvest in their
properties, and better manage inventory.
Significant Consumer Problems
Confusing and potentially unclear marketing practices
The rapid adoption of the Internet for travel booking has led to the rise of
some potentially confusing and unclear practices.
- Customers who go to an online distributor?s website to find a hotel may
see a hotel listed as ?Sold Out? when that hotel actually has rooms to sell. - Customers may be lured to a site with the promise of huge discounts on
recognised hotel brands, which may not exist in any meaningful quantity. - Customers searching for a specific hotel brand can be diverted to another
website without their knowledge or consent.
IHG will only work with distributors and their affiliates who are committed
not to engage in any of these types of practices.
Unclear presentation of taxes and fees
When booking a hotel room on some distributors websites, a guest may see a
charge for taxes and fees added to the room rate. In many cases, it is not
made clear to the guest what proportion of this charge is for taxes, and
what is for service fees imposed by the distributor. This means that a large
part of the taxes and fees line may often, in fact, be fees retained by
the distributor, although many guests may be unaware of this. It also leads
to problems for hotel owners and distributors in determining the appropriate
taxation basis on the amount remitted by the distributor to the hotel.
IHG will only work with distributors who commit to showing clearly all guest
charges and to helping hotels directly address the question of the
appropriate taxation basis.
Antiquated and unreliable booking processes
Despite the hi-tech nature of the Internet, it is surprising that some of
the third party sites still use manual and inefficient booking processes.
Consumers can make reservations on a distributor?s website, but those
reservations are often ultimately transmitted to the hotel via a fax or
other process that then must be manually re-entered into the hotel?s
reservation system. This leads to the potential for lost reservations,
reduces consumers? confidence that their booking is secure, and increases
operational costs for hotel owners.
IHG will only work with distributors who either already have automated the
booking, payment, and settlement processes or are committed to automating
the processes in a short period of time.
Increasingly Unattractive Business Model for Hotel Owners
Hard for hotel owners to offer the best rate available
Current online distribution models make it difficult for hotels to offer the
best rate available. In some cases, hotels don?t have the ability to set
their room prices on third party sites, making it unnecessarily difficult
for a hotel to ensure that it stays in compliance with IHG?s Lowest Internet
Rate Guarantee.
IHG will only work with distributors and their affiliates who commit to work
with hotels to comply with IHG?s best rate available promise.
Hotel owners unable to respond to supply and demand
Under the existing model, hotel owners are unable to make real-time choices
on controlling rooms available for sale, taking into account demand levels,
customer buying patterns and channel costs. Hotel owners often subsidise
inefficient distributors by being forced to keep open high cost channels
when demand is high.
IHG will only work with distributors and their affiliates who commit to
allowing hotel owners to respond to market supply and demand.
Internet efficiencies unrealised by hotels
The high cost of some current distribution channels prohibits efficiencies
gained from the Internet from being passed to hotels and consumers. In fact,
some distributors are currently operating with 20-30 percent commission
margins, a level that far exceeds even ?traditional? offline travel agents.
IHG will only work with distributors who want to share Internet efficiency
gains with hotel owners and guests.
`We are committed to working with a wide variety of sales distribution
channels`, said Gowers. `However, we are taking the stand that we will not
have our brands sold through distributors who refuse to solve these
problems. Customers and hotel owners have a high degree of trust in our
brands our reputation and heritage is built on that trust.`
Leroy Lail, chairman of the IAHI, stated, `We as hotel owners are fully in
support of this new standard. It is a win-win for owners and guests alike.`
InterContinental Hotels Group has always been an industry leader in e-
commerce, being the first company to offer online reservations in the
industry. IHG was recently recognised by an Internet assessment performance
company, Keynote Systems, for having the fastest website in the industry,
and was voted the best international hotel website in the most recent
Freddie Awards (the most prestigious frequent traveller programme awards).
IHG was the first company in the hotel industry to earn the TRUSTe seal of
approval for its online security and privacy protections. Over 70 percent of
InterContinental Hotels Group online reservations are currently booked
directly via its own websites, well above the industry average of 50
percent. Bookings through third-party online distributors currently
represent less than two percent of room revenues for IHG`s brands worldwide.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
