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4/20/2004
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Hotel Chain Puts Pressure On Third-Party Travel Sites

InterContinental is adopting new standards for selling inventory via travel Web sites--and says it won't do business with those who refuse to comply.

InterContinental Hotels Group on Tuesday provided the latest example of how hotel companies are aggressively seizing control of online booking practices. The 3,500-hotel chain said it would adopt new standards for selling inventory via third-party travel sites such as Expedia, Travelocity, and Orbitz. The new standards, which were approved last week by franchisees, go into effect May 20.

Among the concerns about third-party online travel sites cited by InterContinental are unclear marketing practices that confuse consumers by infringing on trademarks and inaccurately presenting room inventory; antiquated booking procedures, such as fax and E-mail confirmations, that often result in lost reservations; pricing inconsistencies that leave consumers unsure where they'll find the best room rates; and an inability to make real-time changes to the inventory available on third-party sites. InterContinental says it no longer will do business with third-party sites that aren't making changes to solve these problems.

Tom Seddon, InterContinental's senior VP of brand performance for the Americas, says his biggest concerns revolve around how the issues impact customers' experiences and perceptions. "Our customers have a lot of trust in our brands," Seddon says. "But people judge you by the company you keep." He says InterContinental has been getting feedback from customers indicating that they're confused by pricing, inventory, and branding inconsistencies they encounter on third-party sites.

Hotel chains such as InterContinental, Hilton Hotels, Wyndham International, and Carlson are changing their online booking strategies by working to establish two-way XML connections to third-party sites. The goals include making it possible to conduct real-time inventory control, cut companywide deals with the third-party sites that provide better terms for individual properties, and offer lowest-rate guarantees on their branded Web sites. These efforts put more pressure on third-party sites to lower the fees they charge hotels and to fundamentally change the way they do business.

Hotel execs say that while third-party sites were a helpful channel during the economic downturn, the combination of an improving economy and the more complete E-commerce infrastructures they have in place have given them leverage to seek industrywide changes that will result in more control over their inventory and pricing and, they hope, increased revenue per room. Seddon says that if the issues aren't addressed now, third-party distribution will only get more challenging as the online booking channel grows. "The distribution channel has become big enough, but not so big that we can't solve the problems."

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