Hyatt Hotels is playing hardball with Expedia.
Fed up with the hefty fees it pays to the online travel giant in exchange for room bookings, Hyatt is threatening to exit Expedia’s platform by July 31 if the stiff commission rates aren’t cut.
The beef, first reported by Hotels Magazine, could be the first of more such contract disputes as the hotel industry pushes back against Expedia, Priceline and other so-called online travel agents, or OTAs.
“The tension between the OTAs and hotels is increasing because the OTAs have been growing market share,” said Cowen analyst Kevin Kopelman, who estimates that up to 10 percent of Hyatt’s business is derived from Expedia bookings.
“It’s too early to tell whether other hotels will follow Hyatt’s lead,” Kopelman added, “but over the past 18 months, the OTAs have increased their market share significantly.”
Hoteliers pay fees of 15 percent to 20 percent of a room rate to OTAs like Expedia, according to Kopelman.
To sidestep those fees, Hyatt and others are expanding loyalty programs that offer lower room rates when guests book directly through the hotel.
“Our focus remains on growing the value proposition for booking directly with Hyatt so we can build strong relationships with our guests … and improve hotel profitability,” a Hyatt spokeswoman said in a statement.
To that end, Hyatt informed its hotel owners that it will launch a new marketing effort aimed at promoting direct bookings — and it will increase ownership fees by 7 percent to fund the initiative, according to the report.
“We partner with several hundred thousand hoteliers around the world and we stand by the value we deliver,” Expedia said in a statement.
The love-hate relationship between hotels and OTAs has been brewing for more than a decade.
In 2004, InterContinental Hotels Group followed through on its threat to leave the Expedia network for several years, but rejoined when the recession hit and travel slumped.