Red Lion Hotels is obviously a much smaller chain than a Hilton Worldwide or Marriott International. Still, Red Lion's deal to offer its member-only rates on Expedia.com and Hotels.com represents the start of some shifting in the direct-booking landscape. Expedia is a powerful force in hotel distribution and there will be more of these changes to come.
And then there was Red Lion Hotels — which has rebooted its overall relationship with Expedia Inc.
Expedia.com and sister site Hotels.com began offering Red Lion Hotels’ member-only rates and auto-enrolling non-members in Red Lion’s Hello Rewards program when they book on Expedia.com and Hotels.com.
As bigger chains such as Hilton Worldwide and Marriott International, among others, aggressively market their direct-booking campaigns, withholding their lowest, member-only rates from Expedia, the Priceline Group and metasearch engines such as Kayak and TripAdvisor, Red Lion has decided to play ball with Expedia Inc.
When Expedia.com and Hotels.com customers seek to book a Red Lion property on those sites, they view a Red Lion member-only rate — in addition to seeing a higher, non-member rate. Expedia advises consumers that if they book the Red Lion member rate on Expedia.com or Hotels.com then they will be automatically enrolled in Red Lion’s loyalty program. Consumers receive whatever perks Red Lion hands out and Expedia+ or Hotels.com Rewards too.
Expedia then sends the consumer’s email to Red Lion — which is a big deal because the online travel agencies don’t normally share such information with partners — to finish the enrollment. If the consumer is already a Hello Rewards member, Expedia sends the hotel chain, which has 114 properties in the U.S. and Canada, the email information to confirm that the consumer is a member.
“That’s a huge deal,” Red Lion Hotels chief marketing officer Bill Linehan says, referring to the chain receiving customer emails from an online travel agency. “We now have the ability to communicate with our consumers before they even arrive. Every single consumer.”
Red Lion Is Making Gains
Like the bigger chains, Red Lion previously offered only its non-member rates to the online travel agencies but Linehan says that’s only because they — with the exception of Expedia — haven’t developed technology to recognize and auto-enroll Hello Rewards members.
Unlike the other chains, Red Lion, which is going after the “long tail” of consumers who aren’t elite members of other programs, rewards members’ bookings regardless where they take place, Linehan says. Members previously didn’t see the lowest Red Lion rates on Expedia but now they do.
Expedia describes its new Red Lion program with Expedia and Hotels.com as a test and Red Lion is very happy with the results to date.
Linehan says Red Lion boosted the growth in its Hello Rewards sign-ups “4x” in July, compared with June, and “1x” of the growth came from its revamped Expedia relationship.
When Red Lion recently began offerings its member-only rates to Expedia.com and Hotels.com, the chain saw its properties rise about 10 positions on average within Expedia’s search results.
Expedia over the last few months “dimmed” the search results of hotel chains that were pushing direct bookings on their own sites and not offering Expedia the lowest rates. With their rates not competitive, the chains’ saw their properties’ displays on Expedia sink in results, and sometimes they appeared without photos or much description.
Linehan says its new relationship with Expedia not only involves Expedia.com and Hotels.com but also brings new ways of doing business with Expedia’s Egencia corporate travel unit, as well as keywords and placements.
“It’s very much encompassing,” Linehan says. It’s not just straight margin and commission.”
Linehan won’t say whether Red Lions’ economics with Expedia have changed with the new relationship but he argues that sometimes it is more cost-effective to reach 1,000 travelers through acquisition channels such as Expedia than to create brand awareness for the chain’s own website.
Expedia Thinks the Book-Direct Landscape Is Changing
Melissa Maher, senior vice president of the global partner group at Expedia Inc., believes that the environment is changing regarding the hotel chains’ drive to push direct bookings on their own sites.
Expedia is currently in talks with other chains to get their members-only rates, Maher says — but we don’t believe that means Hilton or Marriott will be reversing course anytime soon.
The Red Lion deal is a move by Expedia to position itself as not just a booking site and distribution channel but also to up its skills as a customer acquisition channel for hotels.
In a further testament to distinctions blurring between online travel agencies, hotels and metasearch channels, Expedia has been offering, through Intent Media, competitive advertising from hotels and other online travel agencies, for example. Now Expedia is helping a hotel chain sign up members to the chain’s loyalty program.
Maher says some chains have given properties the ability to opt out of the chains’ direct-booking programs, meaning they can offer discounted rates to third parties such as online travel agencies.
“The space is changing a little bit,” Maher says.
We searched Expedia sites and found a few chinks in the armor, including the Hyatt Regency Minneapolis, the Grand Hyatt New York and the Best Western Hotel Jtb/Southpoint, all of which were offering discounts to their chains’ non-member rates.
These properties were indeed, though, exceptions to the rule as most properties we checked were adhering to their chains’ direct-booking standards.
The Red Lion-Expedia deal is not exclusive for either company. In other words, Red Lion is free to strike similar relationships with other online travel agencies, and Expedia is free to grab member-only loyalty rates from other chains if they decide to do offer them.
Maher says Expedia Inc. is hoping to expand such programs when it finishes testing with Red Lion.
Meanwhile, Red Lion is likely seeing incremental revenue from Expedia and Hotels.com.
Says Maher of Expedia, referring to Red Lion: “Our algorithm is certainly featuring them more.”
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Photo credit: Red Lion Hotels is offerings its member-only rates on Expedia.com and sister site Hotels.com. Expedia customers get notified they will be auto-enrolled in the Red Lion loyalty program if they book the special rate on Expedia or Hotels.com. Expedia