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Expedia’s new Accelerator program offers a way for hotel properties to move their way up from page three to the first page of listings on Expedia.com — all they might have to do is pay Expedia an additional 10 percent commission on top of their typical payments.
After discussing Accelerator with distribution officials from a small hotel group and a major chain, as well as a consultant who related feedback from several hoteliers, Skift essentially got a first look at how the new Expedia bid-for-placement program works.
Opinions in the hotel industry about the program — which turns out to be not completely new — range from horror over another piece taken out of hotels’ quest for profitability to acceptance as an effective means to put heads in beds during periods when occupancy rates are challenging.
To be clear, Expedia states that three factors, including the hotel’s offer strength, quality score, and compensation, determine rankings on its hotel pages. Expedia claims the amount of the commission is the least important factor of the three. [See Expedia’s full statement below.]
How the Expedia Accelerator Program Works
In Expedia’s hotel extranet, the hotelier can select the promotions tab and enter the dates the property wants to run the numbers and bid in the Accelerator program. A pop-up specifies what the property’s current position is on Expedia’s pages and how much the position would improve based on percentage increases in the hotel’s commission payment.
For one of Rosen Hotels & Resorts’ larger properties in Orlando, bidding an additional 1 percent commission would see the property rise from position 22 to position 15 on Expedia’s first page of search results for a midweek stay of three days starting March 17.
For one of Rosen Hotels’ smaller leisure properties in Orlando, offering an additional 3 percent commission for a three-day stay starting September 17 would see the listing rise from position 117 (page 3) to listing 92 (page 2).
Bidding an additional 10 percent higher than its normal commission for the same leisure property on the identical dates would see its listing rise in the ranks from 117 (page 3) to 36 (page 1).
A hotel definitely would feel a positive impact from moving up to page 2, from page 3, on Expedia’s pages and obviously would get a significant boost being on page 1, says Paul Naas, who heads Internet sales for Rosen Hotels and likes the Accelerator program.
“I typically use it for short-term impact,” Naas says. “I might be trying to impact something in the next two weeks or mid-week stays. We use it judiciously, depending on the needs of the property.”
The program actually has been around for about a year in different forms, Naas says, as previously a hotel would be able to call an Expedia market manager, offer an additional commission, by percentage, and the market manager would test the impact in the listings’ rankings.
“This is easier to use,” Naas says, referring to the new incarnation of the bid-for placement program. “Now you can see what’s happening live.”
Naas says he’s heard of some hoteliers using Accelerator for a month at a time and others, like himself, using it more tactically.
The additional commission can be bid by percentage only, and it’s capped at 15 percent above the property’s base commission. Hoteliers can adjust the percentage prior to finalizing the bid to see how the changes would impact sort order.
Unlike Booking.com, Expedia doesn’t identify Accelerator participants to consumers in any way.
“We don’t use a logo as offer strength and quality score also make up part of the placement,” an Expedia spokesperson says.
Independent Hotels Have More Limited Options
While some hotel industry consultants call the Expedia Accelerator program “the final nail in the coffin of hotel profitability,” Naas says “at certain times it is necessary” for independent hotels to use programs like Expedia Accelerator and Booking.com’s similar and older Preferred Program.
Travel metasearch companies and Google Adwords have long had bidding for placement.
A big chain has deep pockets for marketing and pushing direct bookings, which “everyone wants,” Naas says.
“We don’t have those kinds of budgets to spend on marketing and advertising,” he adds.
Like Expedia’s program, Booking.com’s Preferred Program, which enables properties to move up the rankings when offering higher commissions, is effective when targeting specific dates, Naas says, although he prefers the usability of Expedia’s Accelerator program because all of the parameters are viewable on one page in the extranet.
It’s Still Early
A distribution official at a major U.S.-headquartered hotel chain says it is still vetting Expedia Accelerator to determine if and how it might want to use it.
“The Accelerator algorithm shows your potential placement — no guarantees,” the major chain official says. “We have already seen a hotel get upset because they did not get the predicted increase in placement as other factors, such as offer strength and quality score, still play a role.
“The additional margin only impacts the compensation piece of the overall sort order so if you have lower scores in other areas you have to give additional margin to ensure a lift.”
Meanwhile, a travel industry consultant shared feedback from several hotels about the Expedia Accelerator program and says paying “an additional 1 percent commission generally moves the property up a few spots and 5 percent will start giving you a good ranking.”
“However, if you have a low conversion rate it will take more to move you up and also any bad ratings will mean that you have to pay more to move up. Usually between 3-5 percent will give you a good lift.”
The industry consultant ties Expedia’s launch of Accelerator to the online travel agency’s move to lower hotel commissions over the last year in a push that has it reducing the commission gap between Expedia and the generally lower commissions of Booking.com.
“This left a hole for them in revenues. So in comes Accelerator.”
Expedia Inc.’s Statement About Its Accelerator Program
Over the last two decades, the Expedia group has been refining our algorithms to deliver the best hotel search results in the industry. We’ve also been working closely with our hotel partners on building unique tools in our marketplace that meet the needs of our hoteliers and travelers. There are three key toolsets we’ve relied on for many years to prioritize search results: Offer Strength, Quality Score, and compensation. Each of these are available for hoteliers to review and manage through Expedia Partner Central (EPC). Offer Strength is the best way to perform well on Expedia as a hotelier, and it is determined by the quality of the deals on Expedia sites for the dates searched, levels of rooms actually booked on Expedia sites, and the number and level of review scores, all as compared to similarly situated hotels on Expedia group websites. Quality Score reflects the caliber of content provided to Expedia and travelers; this includes things like ensuring the number of relocations or refunds are low and that travelers visiting Expedia group websites see competitive rates and availability, compared to similarly situated hotels on our sites. Last, and least important in the sort algorithm, is compensation – this is where existing tools like Accelerator come into play. We’ve learned prioritizing hotels based primarily on their Offer Strength and Quality Score provides the greatest customer satisfaction, as demonstrated by bookings. By building the Expedia Marketplace where hotels with the best deals and positive hotel reviews are at the top, we also generate the highest returns for our hotelier community.
We hear frequently from hoteliers that they care deeply about visibility. We’ve consistently provided hotels with various tools they can use to gain an edge on Expedia’s sites over other comparable hotels in a competitive market. Particularly in competitive markets, a small bump in visibility can have a big impact on a hotel’s conversion. Imagine a hotelier in New York City that appears on the third page of search results – moving on to the second page for a short while could have a significant impact on their business. That’s just what Accelerator allows them to do: it is a precise tool which enables hotels to adjust compensation for the days they need more visibility and bookings, giving them a boost in Expedia’s Marketplace relative to other hotels with similar Offer Strength and Quality Score ratings. This is just one of many levers a hotel can apply to increase its visibility to travelers searching on Expedia group sites. For reference, there’s no way a hotel will gain the best spot in the Expedia Marketplace if its Offer Strength and Quality Score are low, no matter how much compensation it’s willing to pay – i.e. you can’t buy your way to the top.
Customers want to see hotels that meet their needs from the start. Hoteliers want to stand out amidst their competition. Expedia group sites offer a one-stop shop for travelers to search for and book various hotels based on rate, availability and service for the dates and location travelers are interested in.