Dirty Tricks by Expedia

[Mike]

I usually book using expedia, but I was always thinking that the commision was a lot lower, somewhere in the 10 percent range, so I figured it worked out for everyone. But after doing a google search about Expedia, I think I will start booking direct with the hotel for now on. 25% is crazy, when you have your hands in the pockets of nearly every hotel in the somewhat modern world.

Now we get an inkling to why hotels offer 'guaranteed lowest price' through them directly, and why when some people call the hotel directly and ask for a discount off their advertised prices they sometimes get them. When they are dealing with you directly and avoiding a 25% commission right off the bat there is a lot of wiggle room and they still come out ahead.

I'm still blown away by them taking a 25% cut off the gross sale. If Luna is run well it probably operates around a 30% net profit margin, give or take. So for a $100 room rate they net $30.00. Expedia's 25% off the gross equates in reality to 84% commission of net. There just isn't any way in the world a hotel could be profitable from guests sent by Expedia. They must look at it as a money losing proposition or break even at best, with the hopes of gaining future profits from repeat business booking directly with them. But I know that conversion rate has got to be low. Any customer from Expedia today most likely isn't going to change how they book travel in the future, it will be Expedia again or some other travel site. Ugh... what a nasty situation to be in as a business owner. Run, run run away!

 

[flots am]

They should be able to take that 25% and devote it to a dedicated marketing budget and spin circles around these guys.

No kidding.

Even if Expedia only keeps 10 rooms full for half the year that's 1800 room/days. If Expedia's cut is 25% and the room is $75, Expedia's cut would be over $22,000/year (assuming my math is correct. I'm actually working on something else right now )

While that's not much money to be at the top of the list for "hotels" everywhere, that' kind of money could certainly put one hotel near the top of Google's search results for Playa Del Carmen or any other single location.

All it would take is a dedicated employee who did nothing but make sure that the guests were all really happy, and a lot of work on the internet asking for favourable reviews and links.

flots.

 

[Mike]

Yep Flots you're exactly right.

Hotels are pure service plays. Location, room quality and service experience are everything. If you look at their reviews on Trip Advisor they do pretty well, listed about in the top 10% of their competitors. Where they have room for improvement on their reviews is quality of room, cleanliness, and sleep quality. Those are all problems that could be influence with money spent on their rooms. Money diverted from Expedia devoted to impeccable room quality and cleanliness would result in even higher ratings and increase in business, reducing all of their marketing expenses across the board and benefit them with all guests no matter where they come from. If I was the owner that's where I'd be spending the money first.

 

[DandyDon]

All it would take is a dedicated employee who did nothing but make sure that the guests were all really happy, and a lot of work on the internet asking for favourable reviews and links.

Sounds like Blue Angel when Jeanie handled all reservations, which was fine if you got along with Jeanie.

 

[LiquidDivingAdventure]

I used a travel website my first time to cozumel. When i had a problem with my flight i called them and they said call the airline. What did i use them for, Now i use the travel sites to compare prices and thats it. I book straight with my hotel and am able to do a dive package and have not found a better deal on any travel sites. I also just book drectly with the airline for the same reason . I just don't feel that i need to pay someone to book my vacation when i can do it myself. All the research you need is at your fingertips.

There are lots of folks like diverokc who like to do all the leg work and believe they are getting a deal. Sometimes yes and sometimes no. We book dive travel packages but I often avoid booking air for our clients as the airlines no longer pay any commission. I mean, really, how many people out there work for free...? And many of my clients travel using air miles. So what does the dive travel agent offer...? Well I turn part of our commission back to the clients as a discount or pay for their nitrox for a week or some other perk that I hope our travelers enjoy. As an example, if you book a Fiji trip via an agent, you can get an overweight bag coupon that is only available from travel agents and not available at the ticket counter. I'm not sure you get that with expedia. And, like other dive travel businesses, we often travel with our groups. If you have a problem, we are there in person. I know expedia doesn't do that. We often get discounted rates on nitrox that we pass on to our clients as well as other benefits. I have also paid for DAN memberships and travel insurance for my clients.

I know the economy is tough right now and we all try to get good deals, but I often tell folks, if you really wanted to save money, you would stay home and not take that dive vacation. Some trips are just plain expensive. A liveaboard in Indonesia can set you back $10,000 pp with international airfare, hotels, etc. When I book a client to Indonesia, I do the best I can for them, paying for wire transfers, picking up some domestic air costs, etc. Some of the trips we book for divers are beyond my budget right now so we do appreciate getting the best deal possible for ourselves as well as our clients.

It's kind of a do-it-yourself world these days with home repair, auto repair, all kinds of stuff where we think we can save money. I guess that is true if you think your own time is worthless. I used to be a general contractor and did some plumbing and electrical repair a bit ago. At the end of the day, I would have been both time and money ahead to have hired and electrician and plumber.

Dive travel is the same. Believe it or not we all try to do our best for our clients and save them both time and money. My company will never be expedia nor do I want to be. We provide a service that we hope is of value and we have names and faces and cell phones that you can call 7 days a week. We are in the business because we love diving and marine conservation. We donate profits to conservation groups and we participate in marine cleanup events. I'm not sure expedia does that.

 

[DandyDon]

LDA, there is a lot of possible truth to your explanation - true for you anyway. Some organizers are far better than others.

And there is Cozumel. Too easy to do it yourself.

And some folks don't care for group trips.

 

[ggunn]

Now we get an inkling to why hotels offer 'guaranteed lowest price' through them directly, and why when some people call the hotel directly and ask for a discount off their advertised prices they sometimes get them. When they are dealing with you directly and avoiding a 25% commission right off the bat there is a lot of wiggle room and they still come out ahead.

I'm still blown away by them taking a 25% cut off the gross sale. If Luna is run well it probably operates around a 30% net profit margin, give or take. So for a $100 room rate they net $30.00. Expedia's 25% off the gross equates in reality to 84% commission of net. There just isn't any way in the world a hotel could be profitable from guests sent by Expedia. They must look at it as a money losing proposition or break even at best, with the hopes of gaining future profits from repeat business booking directly with them. But I know that conversion rate has got to be low. Any customer from Expedia today most likely isn't going to change how they book travel in the future, it will be Expedia again or some other travel site. Ugh... what a nasty situation to be in as a business owner. Run, run run away!

The only way it could work is if Expedia is filling rooms that would otherwise be vacant, which is my take on it. Many costs of running a hotel are the same whether they have guests or not. If a hotel is routinely reasonably full they would have no incentive to use Expedia. If they are having hard times, a room occupied for a low rate may be better than a room unoccupied.