KPMG Consulting, LLC
  • ¾ of hotels fail to deliver on web price guarantees
  • Less than one fifth of UK hotels honour web prices

Hotels are failing to honour price guarantees which are advertised on their websites according to a new survey by professional services firm KPMG. The research, which was conducted across 330 hotels in16 countries, found that although 43 per cent of hotels offered best web rate price guarantees only 27 per cent of them delivered their price promise.

UK hotels performed worse with only 19 per cent honouring price guarantees on their website prices. It is only 12 months since most major hotel chains decided to tackle the issue of attracting customers away from third party agents by offering the lowest price guarantees if rooms were booked online via the hotel’s own website. This was a new strategy by hotels to gain greater control over their booking distribution systems.

Nick Pattie, director of KPMG’s hotel practice which conducted the research said, “These survey findings are surprising considering the amount of effort being made by hoteliers to direct customers to their own booking channels. Hotels want their customers to book direct but in practice, hoteliers aren’t delivering consistent prices and customers will continue to use other booking methods which offer more attractive room rates.”

The KPMG global survey found the majority of cheapest hotel room rates are still found on the internet with 36 per cent of room rates being cheapest on via online intermediaries although there are significant regional variances.

However, changes are afoot. Hotels are showing signs of taking more control over their distribution strategies. Thanks to improved market demand, hotels no longer have a dearth of rooms to shift at discount prices via online agents. This has led to the industry abandoning alliances with the online intermediaries that are not willing to comply with the hotel’s code of practice, eg IHG pulled out from Expedia and hotels.com. Conversely, alliances are being formed between hotel brands and preferred online players eg Hilton and lastminute.com.

The survey highlights some regional trends which are bucking the global survey findings. Corporate travellers in America get the best deals with the corporate travel agent. Emerging countries in Eastern Europe tend to offer cheaper rooms via their own booking channels, offer a high percentage of guaranteed web rates, and have a low level of price variation between the different booking channels. However, online agents are continuing to increase their representation in these countries and may yet wrest control from the hoteliers.

The Global Hotel Distribution Survey 2005” researched room rates from over 330 hotels and across 16 countries. It reviewed hotel room rates offered to corporate travellers wanting a single standard room midweek. The prices in the survey were collated from all room rates quoted by making a direct call to the hotel, hotel website, hotel central reservations, online intermediaries and corporate agents) across USA, Canada, UK, Western Europe (Austria, France, Germany, Italy, Netherlands and Spain), Eastern Europe (Hungary, Czech Republic and Russia) and the rest of the world (Australia, UAE, South Africa, Singapore and Canada).

KPMG is the global network of professional services firms who provide audit, tax and advisory services. KPMG LLP operates from 22 offices across the UK with 9,000 partners and staff. KPMG recorded a UK fee income of £1,066 million in the year ended September 2004.KPMG LLP, a UK limited liability partnership, is the UK member firm of KPMG International, a Swiss cooperative.

Nick Pattie
+44 (0)20 7152 5044
KPMG Consulting

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