How Much It Pays to Book Direct Depends on the Hotel Brand

While all the major hotel chains are trying to drive direct bookings by offering discounted loyalty rates, there are differences in their strategies and benefits to guests. With Choice Hotels beginning to offer discounted member rates on July 20, it joined its peers Hilton, Marriott, Hyatt, Wyndham, InterContinental Hotels Group, and Wyndham, among others, in launching special room rates just for loyalty members. The chains believe the logic behind these rates is theoretically sound. By offering a cheaper rate to guests who are a part of their loyalty programs and who choose to book direct instead of booking with an online travel agency like Expedia or Booking.com, hotels lower their distribution costs and could strengthen their loyalty relationships with customers. And if a customer isn’t yet a member, these cheaper rates should incentivize them to join the loyalty program. There are several issues, however: If no one knows about the rates, how helpful will they be for a hotel’s bottom line? Are they simply dilutive, in the long run? As the online travel agencies retaliate and the chains' market share on Expedia or Booking.com diminish, will the tradeoffs be worth it? “I’ve heard owners say they want to lower their room rates to stimulate business during softer periods, but how much money are you going to spend to promote it?,” asked David Kong, CEO of Best Western. “If no one knows about it, you’re discounting the business you’re going to get anyway. If you don’t promote it, it doesn’t mean anything.” That’s why some brands, Hilton in particular, have launched substantial marketing campaigns to get customers to “stop clicking around.” It’s also why