'Disruptive' hotel distribution means chaotic hotel buying

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At a hotel "Travel Distribution Summit" in Europe last month, industry leaders focused on coping with "disruptive business models" in a fast-changing marketplace. And what the hotel mavens call "disruptive" is likely to make buying hotel rooms tougher, not easier for consumers. Although the conference covered many topics, one speaker summed up a trend that should strike terror into the heart of any traveler: Hotels will start "adopting some of the pricing practices of successful budget airlines."

Reduced to practical terms, this means that many hotels will start to charge extra for some basic services that were formerly included in the base rates. Apparently, these hotels are finding that travelers are buying by price to an increasing degree, often through third-party online agencies that post side-by-side rate comparisons or "opaque" rates. As with airlines, this trend gives hotels a huge incentive to post base rates that are as low as possible -- and, often, that translates to a lot less than you really have to pay.

Some hotels have been doing this for quite a while, as I've reported. So far, the main rate dodge has been mandatory fees generally labeled as "resort" fees: part of the total that hotels carve out of the real price, give a plausible name, exclude from the base rate displays and add back later. In the future, you can expect at least some hotels to start adding more mandatory fees that are supposed to cover:

-- Housekeeping services.

-- "Concierge" services

-- Parking (even in suburban and rural areas)

-- In-room Wi-Fi

-- In-room cable TV

-- Air conditioning

In some cases, the fees will actually be optional: You won't have to pay if you're willing to forego daily maid service or fresh towels, for example, or if you don't mind parking on the street. But breaking out a bunch of fees, even when optional, will make it very tough for you to figure out exactly what a night in a given hotel stay will actually cost. This situation parallels what you find in the airline business, and the various interested parties are engaged in vigorous arguments about how different distribution systems can treat the many optional airline fees.

But even worse is the likelihood that many such fees will be "mandatory," and unrelated to the services they're supposed to cover. And that system is pure scam. The U.S. government and government agencies in many other areas, have pretty well solved the mandatory fee problem among the airlines, with rules that require all-up pricing, from the outset, in fare displays. Sadly, however, in the United States and most foreign countries, government agencies don't have as much control over hotel rates as they do over airfares. In the United States, that responsibility belongs to the Federal Trade Commission, and its progress on deceptive hotel pricing has been minimal, at least so far.

As a consequence of the "disruptive distribution" problems, as consumers, you'll find that no one source can accurately display and compare hotel rates on your first look. With some chains, for example, you'll get a lower rate if you buy through the chain's website -- especially if you're a high-level member of the frequent stay program. With others, you may find that some online agencies, like airfare consolidators, will have access to rates that are below those posted by the hotels. And the opaque online agencies will be unable to quote all-up prices.

Still another consequence is that you may find that the best rates require purchase far in advance and are nonrefundable -- again, copying a long-established airline custom.

All in all, it's clear that finding the best hotel deals is going to get harder, not easier. In the long haul, third-party online agencies may well develop the skills to overcome at least some of these problems. But for the foreseeable future, you'll have to spend lots more time online than now to get the best rates. That's not good news, but that's how it will be.

(Send e-mail to Ed Perkins at eperkins(at)mind.net. Perkins' new book for small business and independent professionals, "Business Travel When It's Your Money," is now available through http://www.mybusinesstravel.com or http://www.amazon.com)

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