Expedia Inc. is in the process of introducing globally a new way for hoteliers to promote ancillary services such as discounted spa treatments, loyalty points or free parking on brands from Expedia.com to Hotels.com — but the new product is mostly interesting because it is emblematic, although a small element, of the online travel agency’s huge ambitions in providing new business services to the hotel industry.

And getting a greater foothold in the hotel industry as a service provider is a way for Expedia to increase its influence, gain a wider audience and offset the hundreds of millions of dollars the company invests annually ($830 million in 2015) in its wide-ranging technology platforms.

In a Skift backstage podcast right after appearing on stage at the Skift Global Forum in Manhattan September 27, Expedia Inc. CEO Dara Khosrowshahi revealed some very interesting perspectives about Expedia’s push into business services for hotels, which include direct-connect technology to Expedia’s extranet, providing hoteliers with guests’ feedback during their stays, powering package-selling on Marriott Vacations, auto-enrolling Expedia site visitors into Red Lion’s loyalty program, and an Accelerator feature for hotels to jump higher in search results on Expedia’s sites.

Asked about Expedia plans for providing business services to hotels, Khosrowshahi said: “I think at this point it is something that’s evolving…. We are investing hundreds of millions of dollars behind these technology platforms that are designed to make the booking experience better, faster for users. And the way we’ve architected these platforms is that they are extensible for multiple brands, multiple use cases.”

“This is simply about deepening our relationships with our hotel partners and about amortizing that platform investment over a greater audience,” Khosrowshahi said. “So at this point it is a nice opportunity. It holds very strong, early promise. How big is it going to be? I have big ambitions but I am not ready to admit them right now.”

What It Means

Translation? Business services for hotels, if successful, are likely to become a very substantial business for Expedia. Expect a lot more products to come. Expedia designed its technology platforms for multiple use cases — including for leisure, business travel and hotel business services — and it intends to make some of those use cases a reality in deepening its relationships with hotels to expand Expedia’s influence and to leverage the massive investments that Expedia has made over many years into those technology platforms.

Many hoteliers, of course, aren’t looking for Expedia to increase its influence. Along these lines, the chains seek to reduce Expedia’s influence through their direct-booking campaigns.

Marriott and Red Lion, though, have been willing to sign on for new Expedia services and Expedia can probably count on finding a receptive audience among independent hotels that can’t afford to build these services on their own.

If Expedia has “big ambitions,” as Khosrowshahi characterizes them, into providing businesses services for hotels — so does Booking.com, which is probably further along than Expedia in offering theses services to the hotel and restaurant industries.

For example, in 2015 Booking.com launched BookingSuite, which builds websites and provides marketing and analytics services for hotels, and sibling OpenTable offers marketing and analytics services to restaurants. In 2015, Booking.com and OpenTable’s parent, the Priceline Group, grew “advertising and other revenues,” which includes certain revenue from Kayak, Priceline.com, BookingSuite and OpenTable, 49.5 percent to $613.1 million.

Value Add Promotions for Hoteliers

Expedia announced today that hotel partners in North and South America can use the Expedia Partner Central platform to offer consumers perks and services on Expedia sites ranging from free Wi-Fi and discounted spa services to loyalty point promotions and free parking. Expedia plans on releasing the feature globally by the end of 2016.

expedia-promotions

In the above example from Expedia.com, the Grand Park Royal Cancun All Inclusive offers Expedia visitors free resort access for four guests and the Mia Reef Isla Mujeres All Inclusive touts a 20 percent discount on spa services for two.

An Expedia spokesperson says hotels can add the Value Add Promotions for free — there is no extra commission due when guests book the services.

The idea is to enhance marketing capabilities for hotels on Expedia sites, including Expedia.com, Hotwire and Hotels.com, for example. An Expedia spokesperson says the feature enables hotels “to attract customers without always having to compete on price. Value-Add Promotions allows hotels to do that and also helps them merchandize/drive ancillary revenue from non-room products (spa, restaurants, ski lifts etc.) And for Value Add Promotions specifically, they are designed to increase conversion while maintaining and protecting average daily rates and increasing revenue per available room.”

Compare and Contrast

Google offers similar promotional services for hotels while Expedia’s main competitor, Booking.com, generally doesn’t.

In contrast, Booking.com generally lists hotel amenities such as parking and on-site restaurants but doesn’t enable hoteliers to advertise ancillary services in the way Expedia is doing. Instead, Booking.com takes the approach of promoting “Secret Deals,” which market discounts up to 50 percent off “because you are signed in,” and “Value Deals,” which point to hotel prices that are “an outstanding value on these dates.”

Both Expedia and Booking.com — and you can add TripAdvisor, as well — are trying to get more chummy with hotels in providing them with increased services, although they are taking varied approaches when it comes to enabling hotels to market these special offers.

The following Skift Take Studio Podcast includes Khosrowshahi’s comments on business services for hotels, as well as those of other current and former online travel execs opining about the smartphone era as “anachronistic” and other looming platform revolutions.

 

Photo Credit: The Grand Velas Riviera Maya hotel is offering spa discounts on Expedia.com. Expedia Inc. has rolled out a tool to enable hoteliers to promote such discounts on Expedia sites. GrandArt Photography / Grand Velas Riviera Maya