Assessing Marriott Hotels’ Direct Discounts Program Six Months Later

Photo: The Sun Dial pool at the Miami Beach Edition, a Marriott hotel.

When Marriott International CEO Arne Sorenson steps on the ASTA Global center stage on Monday morning, Sept 26, for his “Straight Talk” dialogue with Peter Greenberg, he will be facing some skepticism from travel agents concerned about support from Marriott and other large lodging chains.

Marriott in March rolled out its Member Rates discounts direct to its frequent stay guests, angering some travel agents who felt it was another in a long history of supplier moves to circumvent paying agency commissions.

Since that announcement, Marriott has also rolled out a partnership with Expedia Inc. to help the company increase sales for Marriott Vacations. In that arrangement, travelers accessing Marriott Vacations’ online site can search and book flights with Expedia’s 475 airline partners, and access Expedia’s ground transportation, tours and activities inventory.

These moves have only heightened many travel agents’ concerns about their long-term relationship with Marriott and other leading hotel chains.

"Hotels are following the lead of airlines in years past by implementing policies ostensibly to deal with one undesired set of travel distribution companies,” said John Smith, president of Tower Travel Management, Chicago. “But they're catching their preferred distributors in the cross hairs by making it harder for TMCs to book their ‘member rates’ for our mutual clients.”

Wendy Goodenow, CTC, president and owner of HNL Travel Associates in Honolulu, isn’t satisfied with the trend either. “Marriott has spent years training agents to be able to sell its properties and now it is cutting them down again.  Everyone certainly wants the human touch when they get to their hotel, and Marriott, like all hotels, needs the service factor to be excellent to keep the clients.  Where do [we] find a common ground?”

“Due to their implementation of how these rates are accessed in the GDS,” Smith said, “we have had to put in place workarounds to secure the rates for clients, which adds costs back into the equation. In most cases, the savings of the member rates is outstripped by the costs of human-agent assistance, which renders the rates meaningless from a financial perspective. Our clients are increasingly telling us not to bother booking the member rates."

Stacey Ray, CEO of Groupit Travel in Cary, NC, noted that direct-booking programs are clearly not in the best interest of travel professionals, noting they "force travel agents to break trips up into components, thereby reducing our income and making the booking far more complicated.  For instance, I can package something that includes a hotel, but when the client finds out they won’t get their rewards credit, they request that I take the hotel out of the package, which means I have to abandon the package and now spend far more time booking in components and unless I charge a service fee, I am not making any money to do all of the work."

And is forced to use Expedia TAAP, "I become part of the problem for travel agents and my own competition. Every time I give a booking to Expedia, I am pushing people like myself, small-business owners, right out of the market and giving the OTAs leverage against professional, independent travel agents. And what really adds insult to injury is that if you look at Expedia’s commission rates on their TAAP, they are no different than what the hotel could have paid me and still given the client their rewards perks."

ASTA president and CEO Zane Kerby said the organization “will remain vocal about supplier incentives that do not take into account the value travel agencies bring to suppliers and their customers.

“Much can and has been done to provide rate parity to ASTA members,” Kerby said, adding that the organization has a “continued joint dialogue” with Marriott and other hotel chains on the issue.

Direct discounts are here to stay
After a bump in their relations with Online Travel Agencies over the high commissions they demand, hotel chains like Marriott are figuring out new mutually beneficial partnerships. Thus, direct discounts and new OTA partnerships are here to stay, experts said.

Paul Breslin, managing director, Horwath HTL Atlanta, called the Expedia partnership “a good strategy for Marriott” and “a strategic move by Expedia.

“Look for more connection on common ground with the power players,” Breslin said. “Expedia is too smart to just be a disruptor or tolerate a diminishing market share. The major hoteliers know the importance of intermediaries and the relationships they have with the [consumer]. So the natural tension will continue, but in the end all will continue to work together.”

Marriott affirmed its commitment to its strategy in statements supplied to TMR last week. “We are very pleased with the early results of the [Member Rates] program,” a spokesman said, adding that Marriott Rewards membership (including The Ritz-Carlton Rewards program) now exceeds 58 million members.

“Since the launch of Member Rates, the enrollment growth pace of Rewards has doubled. Bookings by a key targeted customer segment have accelerated since the launch of the program.  We expect that this program will continue,” the spokesman said.

The chain also inferred that it will not be providing its direct discounts through Expedia any time soon. “Member Rates is a rate category designed exclusively to reward Marriott and The Ritz-Carlton loyalty program members who book direct,” the spokesman said.  “We will always act within the intended guidelines of the program.”

But are direct discounts a good deal for consumers?
While direct rates may be a fixture, travel agents can take some solace in the September issue of Travel + Leisure magazine, which conducted a rate comparison of hotel direct programs. For example, when T+L compared rates at three Hilton Hotels & Resorts locations, the direct rate was actually 20% more at the Conrad Hong Kong than the rate listed in an OTA. The best direct savings achieved was 2% at the Logan Philadelphia.

For Hyatt Hotels Corp., T+L found an 8% savings direct at the Andaz Tokyo Toranomon Hills, but consumers would have paid 11% more booking direct with Hyatt for the Grand Hyatt Santiago in Chile.

And for Marriott, the best savings T+L found was a 3% discount for the Miami Beach Edition. At the Paris Marriott Opera, booking with an OTA would have saved the consumer 6%.