Intercontinental hotel group: dealing with online intermediaries
Date
2008
Authors
O'Connor, P.
Editors
Egger, R.
Buhalis, D.
Buhalis, D.
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Book chapter
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Source details - Title: eTourism Case Studies: Management and Marketing Issues, 2008 / Egger, R., Buhalis, D. (ed./s), Ch.1, pp.15-22
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Abstract
Contracts were generally negotiated with individual hotels, and tended to be biased heavily in favour of the intermediary. One bone of contention quickly became control over inventory and retail price. The online intermediaries had fixed allocations of rooms, large discounts and control over the retail price. Thus they could undercut hotels ’ direct prices by accepting a lower margin, or could earn profits by selling their allocation at a premium when the hotel itself was sold out. In addition, they had no risk. If they sold their allocation, they collected their margin. If they failed, they could return rooms for no penalty, leaving the hotel with unsold inventory at the last minute. Hotel companies slowly began to realize that although the merchant model brought benefits in the short run, it also meant that they no longer controlled how and at what price their product was being sold. At the 2004 Berlin Hotel Investment Conference, speakers cited the threat to room rates and profitability posed by third-party booking sites as the biggest single challenge facing the hotel industry.
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Copyright 2008 Elsevier