News this week that Expedia is ending its strategy of dimming hotels in search results should raise a cheer in hotel circles.
Yet it is a subject that raises blood pressure within the hotel community with stories of demotion linked to properties not providing online travel agencies with rates during busy periods or, not bringing enough business to an OTA over a particular time-frame.
The so-called practice of "dimming", whereby hotels do not get a prominent position in searches, or their information and images are omitted, was likened to "rate parity by the back door" at an event in London earlier this week.
The comments were made during the TTI Conference and sparked further discussion as hotels find themselves dropping down the listings in OTA search results.
One speaker, Carl Michel, chairman of home-rental service Veeve and executive chairman of hostel chain, Generator, was scathing of the status quo, saying:
"You ring them (OTAs) up and if you can get hold of anyone, which is a challenge, and ask why you are down the list, they say 'we did not get the business over Easter and someone is paying higher commission'."
The discussion followed a presentation from Suzie Barber, founder of Hotel Bonanza (Startup pitch here), who talked candidly about some of the challenges she has faced in trying to establish the newcomer in the hotel distribution space as well as some she will face going forward.
Even if the practice of dimming is no longer a strategy for some OTAs, other contentious issues remain in the OTA-hotel relationship not least of which is high commission rates.
Following questions on how existing players might react to the Hotel Bonanza model, Barber says she feels it has built enough into its business plan (8% commission, discounted rates) to take on more established OTAs, with huge online marketing budgets.
"They have all sorts of properties on board already and they are not going to drop their commission rates but if they need to respond that means we're doing something right. I'd like to be in that position where we are annoying them."
Michel described the high commissions charged by some as "a lot of money for skimming other people's hard work and profit."
He believes it is possible for lower commission models to work and questioned the value of OTAs when businesses can pay less commission to distribute through other channels such as Airbnb and HomeAway.
NB: Shining light on hotel distribution image via Sashkin for BigStock