LOS ANGELES (Reuters) - Hotel companies have gained control of online sales despite fears years ago that independent Web sites would take the majority of business.
Hilton Hotels and Marriott International executives, speaking this week at the Reuters Hotels and Casinos Summit held in Los Angeles, said they are not dependent on travel agencies for sales but find such outlets helpful to unload last-minute bookings that otherwise would have gone unsold.
Hilton in particular takes pride in its Web site, claiming that 90 percent of its total online sales are made there.
"I think we're the industry leader in terms of how we sell on our own Web site," said Tom Keltner, executive vice president at Hilton on Tuesday. "Clearly our preference is to sell them ourselves if we can."
Third-party travel sites led by Expedia Inc's Hotels.com were powerful forces in the travel industry a few years ago as hoteliers in the midst of a downturn struggled to attract guests, and Web sites delivered.
But as the industry's fortunes have improved, hotel companies have wrested back control of inventory and room pricing and focused on building their own Web sites.
Consumer perceptions of supplier direct sites operated by hotels, airlines and car rental companies have improved, especially among customers who prefer to avoid the booking fees charged by third-party travel agencies.
Travel agencies like Priceline.com and Expedia Inc. have become entrenched in the online travel market, but executives at the top hotel chains see them chiefly as a way to move extra rooms, keeping the bulk of their inventory for themselves.
"The major hotel operators will continue to refine their online reservation systems," said Bear Stearns analyst Joseph Greff.
The agencies' strength lies in their ability to provide price comparisons for shoppers and to book package deals that may be cheaper than booking lodging and transportation separately, analysts say.
Arne Sorenson, chief financial officer at Marriott, on Tuesday said Marriott is working to beef up the pre-arrival services offered on its Web site. About 16 percent of Marriott's bookings were made online in 2005, Sorenson said, and the majority of those were at Marriott-owned sites.
He said, however, that Marriott enjoys a symbiotic relationship with third-party bookers and uses those channels to every advantage to ensure the highest number of total bookings at any given time.
Against this backdrop, the travel agencies are struggling for ways to distinguish themselves in an industry that sees increasing competition from start-up companies all claiming to offer the lowest fares.
Some agencies send phone messages on flight status, customer reviews of destinations and similar services to make the booking process easier and more enjoyable.
Priceline Chief Executive Jeffery Boyd, however, told Reuters on Monday that his company will continue to concentrate on providing customers with the lowest fares. Additionally, Priceline and its rivals are working hard to penetrate European markets where Internet shopping is blossoming.
"We're establishing a very serious business in Europe for Priceline," Boyd said. "If you're looking at purely online reservations, we are now one of the biggest players in Europe."
Priceline reported $165 million of gross bookings for hotels in Europe in the third quarter of 2005, representing about 30 percent of its overall gross bookings.
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