Booking systems drop wholesalers

Asiarooms.com embarked on a policy of contracting room rates directly with hotels in late August, by-passing tour wholesalers who were supplying the booking site with rooms from their annual allotments.

Now a month down stream, travel agents feel they are in no man’s land, as Asiarooms.com begins the task of clearing and closing accounts with Asian tour companies that have been its partners for a decade or more.

One North Asian tour operator commented that his business with Asiarooms had dried up entirely first week of September.

“Since then, all that remains is to collect  outstanding payments from the website company – the bonanza is over.”

A policy to work directly with hotels could ultimately add to back-of-the-house administration costs, minimised when working with just a handful of tour wholesalers.

But it also means a booking website can cut out a middleman and during tough times gain a 15 to 20% reduction on rates direct from hotels. That is quite an incentive in the highly competitive business of attracting visits and translating them into firm online bookings.

Asiarooms.com rarely comments to the media on its business strategy, so it came as no surprise that the office phones were not being answered, earlier this week.

A reliable industry source did confirm that Asiarooms is redecorating its offices so it would be “difficult to hear a phone ring”.

However, Asiarooms is not alone in the strategy to cut links with tour wholesalers. Pressure mounted mainly from hotel groups in 2008, with promises to the travelling public that their global websites would honour a “best rate guarantee.”

Surveys of  hotel search engines illustrated that few of the chains could deliver on that promise. Third party vendors such as Asiarooms.com were still able to gain the best deals, mainly through working with tour wholesalers.

In Thailand, there are several big tour operators that operate a lucrative department feeding contract rates to hotel booking sites. Most of them have seen their business shrink this year, due to recession and a decision by booking sites to seek deeper discounts directly with hotels.

Most hotel groups are keen to work directly with companies like Asiarooms.com and they offer rates that undercut the wholesaler rates by at least 15%.

One Thailand-based hotel group is aggressively monitoring hotel booking sites and offering them discounts to ensure the lowest rates are available across the widest range of web sites.

The pitch runs something like; “we have seen how popular your site is and would like to ensure that you can enjoy the same attractive rates for our properties that are posted on competitive sites.”

The hotel group offers a 15% rebate to the targeted website, based on a rate that is slightly lower than the best offer made to a Thailand-based tour wholesaler.

We posted questions to the hotel group’s CEO on how the policy is working out. So far he has declined comment.

Hotel marketing executives usually justify this business strategy by saying they are consolidating rates across websites so they are more consistent for consumers.

However, tour wholesalers are concerned that they are being upstaged by online travel agencies and booking systems. Their critics would ask why it has taken them so long to recognise that the goal posts in travel distribution have shifted to an entirely different playing field.