Let's Get Ready to Rumble: It's a Travel Industry Battle Royale!
Big players are all wrestling for access to consumers (and their cash). Here are some ways to avoid getting crushed in the mayhem
Airlines, hotels, and cruise companies--who for decades have turned over a portion of their profits to middlemen shilling their products--are all seeking ways to sell direct to the customer. While eliminating third-party sellers entirely may not be feasible, travel suppliers, including Carnival Cruise Lines, InterContinental Hotels Group (which owns Holiday Inn and Crowne Plaza), and Northwest Airlines, are fighting for better terms with the cruise brokers, travel agents, and Internet bookers moving their merchandise. Money is a big part of the struggle, but suppliers are also trying to control how their products are sold, maintain consistency with prices and service, and avoid cheapening their brands.
The smartest thing a consumer can do is keep tabs on the industry--in particular, on the conflicts that will determine who's going to give you the best value. Here's the lowdown on a few of the ongoing battles and what they mean to you.
InterContinental Hotels vs. Expedia
Two years ago, the InterContinental Hotels Group announced a lowest-rate guarantee, promising that customers could always find the cheapest prices for its hotels on its website. Most hotels now have a similar guarantee aimed at steering clients into booking direct rather than via agencies such as Travelocity or Hotels.com.
Last May, InterContinental took its corporate clout a step further, stating that third-party agencies could sell its hotel rooms only if they agreed to certain standards. Among the rules, agencies won't be allowed to bundle taxes and fees when displaying prices (forcing them to disclose whatever fees they're imposing), and they can't say a hotel is sold out when only that agency's allocation of rooms is gone. Travelocity agreed to meet the standards, but Expedia and its sister company Hotels.com refused to go along. As a result, InterContinental will pull its rooms from Expedia and Hotels.com, though this may take awhile because of the complexity of contracts.
InterContinental isn't the only hotel group getting tough with Internet bookers. Starwood Hotels & Resorts, which owns Sheraton and Westin, has its own set of requirements for third-party distributors, though the terms are secret. The upshot of all this wrangling: Now more than ever, never assume an online agency is displaying all of your hotel options or that its price is the lowest available. To get the best deal, it's necessary to consult two or three online agencies, as well as individual hotel websites and a destination's tourism site. Once you have a hotel in mind, call it up. Rates are almost always negotiable, and hotels prefer to take reservations directly.
Carnival and Royal Caribbean vs. cruise brokers
Shopping for a cruise has long been kind of a game--some passengers pay close to full price directly to the cruise line far in advance of the sailing, while bargain hunters seek out discount brokers selling the same room for a third of the price at the last minute. One way the brokers are able to offer cheaper prices is by rebating. Basically, it's when brokers agree to give, or rebate, a portion of their commission to the customer.
But now Carnival and Royal Caribbean are trying to stop the practice that leaves loads of passengers bitter after finding out they paid a lot more than their neighbor onboard. Carnival took the lead, and beginning January 1, any agency that advertises non-approved rates for its cruises will receive a reduced commission or be banned from selling Carnival cruises. Royal Caribbean, which also owns Celebrity Cruises, followed by more explicitly prohibiting not just advertising but selling either line's cruises for less than the published price.
On the one hand, the changes should make shopping for a cruise a lot simpler. Travel agents, brokers, and the cruise line will offer the same price for the same cruise. That price may change from day to day because of availability and other factors, but at least consumers don't have to endure endless shopping marathons. On the other hand, it seems like supercheap cruise deals might disappear. Carnival and Royal Caribbean say that soon the best prices will go to passengers who book early, but we'll have to wait and see. Don't be surprised if a half-full ship that's sailing in three weeks slashes rates across the board.
Travel agents and cruise brokers account for about 95 percent of all cruises sold, and many are uneasy regarding the new policies. Why should anyone book through them if their prices are no better than the cruise lines'? Still, most brokers are taking a wait-and-see position. While rebating may be off the table, a good broker will be able to sweeten the deal with transfers or discounted airfare.