This is a viewpoint by Lily McIlwain, content manager for Triptease.
For the latest report in our ‘Spotlight on…’ series, we spoke to 50 hoteliers about their attitudes to wholesalers and to what we've heard hoteliers refer to as "the wholesaler problem".
Spotlight on... Wholesalers reveals the stark reality of many hotel-wholesaler relationships, with deteriorating communication, mistrust, and frustration marring many a hotelier’s experience.
Download the full report here.
The problem with wholesalers
Despite being contractually obliged to sell rooms only under terms set out by hotels in their contracts, it’s increasingly common to see wholesalers ‘unbundling’ rates designed to be sold as part of tours or packages. These heavily discounted rates then find their way onto some OTAs and a hotel room worth $200 ends up being sold for $120.
The hotel industry faces an uphill struggle against antiquated technologies and non-communicative systems. Wholesalers run on tech that was built for offline bookings, but can no longer make money without selling online. Static rates designed to be rolled into packages and sold by traditional travel agents are being shipped out to OTAs with no oversight available to hotels.
The hotelier’s view
Of the 50 hoteliers we spoke to for Spotlight on… Wholesalers, only five had not come across the ‘Amoma problem’ prior to our survey. The majority were all too aware of the issue. Thirty-seven of the 50 said that they would be prepared to completely cut off business to wholesalers if the problem got bad enough.
Why?
An hotelier from Monaco told us:
“Rate parity is critical in the process of creating the best customer digital experience...We simply need to offer it, no matter how, and if that means cutting contracts with historical partners because they can’t control their distribution, then hoteliers will have to control it themselves.”
Another respondent, from Scotland, took a slightly stronger approach.
“We have to protect our business...If the wholesalers had any business ethics, they would contract directly with hotels and secure a fair price and deal. They are significant and underhand operators who have no integrity and would likely sell for a minimal margin just to make a sale.”
Diminishing returns
As part of our survey, we asked every hotel to tell us one thing they wished they could ask a wholesaler. We then put those questions to a senior travel technology and distribution professional with a wealth of wholesale experience. When asked for a potential resolution to the problem, he replied:
“I think that zero tolerance for irresponsible distribution of a hotel’s inventory is the only way to resolve this. Hotels also need to have an idea of whether the wholesaler actually does bring them business from markets they can’t reach themselves. If the wholesaler is supplying OTAs, then the hotel can arguably reach the same customer via their own website, or via their own contracts with OTAs.”
For a hotel in a major city such as Berlin, switching from wholesalers to purely OTA/direct is increasingly achievable. There are hotels for whom this will feel like less of an option, but it is worth measuring the time spent resolving rogue rate issues against the financial gain that some wholesale partners bring in. Hotels have to perform fake bookings whenever they catch rogue rates floating around on OTAs, determine the wholesaler responsible from the booking information, then contact their account manager to complain.
One hotelier from the US put it simply: “it’s time-consuming and a pain.”
This is a viewpoint by Lily McIlwain, content manager for Triptease.
Spotlight on… Wholesalers
Check out the full report for all the survey results, dynamic pricing insights from Duetto, and potential solutions to the wholesaler problem.
For more illuminating industry research, join us at the Direct Booking Summit in New York or Barcelona, where we’ll be joined by hospitality’s leading figures for two days of education, inspiration and entertainment. Ticket prices rise at the end of August.