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Expedia to blur line between agency and merchant model

August 07, 2012 | Hotel Marketing

Buzz is growing over Expedia’s new payment model and its potential impact on the hotel industry. While many questions remain unanswered, the Expedia Traveler Preference program could place the relationship between hotels and online travel agencies under an even more intense microscope.

Expedia Traveler Preference is a “preliminary program” Expedia has begun promoting to the industry through its market managers. According to Senior VP of Global Strategic Accounts Melissa Maher, the new technology essentially will allow travelers to choose whether to pay Expedia at the time of booking on the site (and Expedia will pay the hotel) or travelers can pay upon checkout (and the hotel would pay Expedia post stay).

During Expedia’s second-quarter earnings call on 26 July, President and CEO Dara Khosrowshahi said, “If and when rolled out on a broad basis, (the program) would be likely to drive back the growth in our agency hotel business, which could result in blended hotel margins as well as our merchant hotel flow trending down over time.”

“As we introduce further innovation into the global hotel business, you would expect the current bright line between agency model and the merchant model to blur over time,” he said. Khosrowshahi said the program is expected to be fully implemented by the end of the year.

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