A year-and-a-half after a public dust-up with Expedia, Choice Hotels is making strides in driving more revenue through its own website.
In the first quarter of 2011, the hotel chain saw its CRS (central reservation system) revenue rise 10%.
"The vast majority of our incremental revenue was attributable to strong gains in revenue from ChoiceHotels.com, which saw revenue up 18% over last year's first quarter," said Stephen P. Joyce, president and CEO.
Joyce attributed part of the website revenue increase to growth in its Choice Privileges rewards program, and to improvements in the user experience, including through its mobile website.
Speaking during the company's first quarter of 2011 earnings call, Joyce characterized the hotel-online travel agency dynamic "as a rapidly changing and potentially disruptive environment."
In the Fall of 2009, Choice Hotels' room inventory went missing on Expedia.com in a contract dispute reportedly over last-room availability and rate parity issues, but the two parties came to terms within weeks.
Fast forward to April 29, 2011, and Joyce, without directly addressing the Expedia episode, added:
However, in our view we have had and have moved into a new phase of a distribution strategy which is all about driving business through our channels and not helping other people build their business on our backs.
Joyce said he admires the way Southwest Airlines promotes its own channels, adding that Choice is not overly reliant on OTAs.
None of the OTAs have increased their share of Choice sales over the last few years and "... we are very focused on keeping it an insignificant and minor part of our overall distribution revenue generation," he said. Joyce continued:
So you know there is a role for the OTAs and it differs depending on the location of that hotel and a bunch of other factors, but we have groups that are really tasked with making sure that our franchisees optimize their top-line revenues by properly managing those channels, but at the end of the day the franchisees are going to optimize their revenues by leveraging what we provide them, which is the channels that we have at our disposal.
So for now, at least, Choice Hotels sees the OTAs as necessary partners, but wants to keep distribution through OTAs relatively small and diminishing.
Of course, the success or failure of this strategy will be greatly impacted by prevailing economic conditions.
Meanwhile, for the first quarter of 2011, Choice Hotels saw its net income remain relatively flat at $15.7 million. Revenue rose 7% to $115.3 million.