by Pranav Patel
Hotel operators need to be worried about Priceline’s most recent acquisition.
Expedia’s recent acquisition of Travelocity and now Orbitz has overshadowed Priceline’s tiny acquisition of RocketMiles. While the Expedia deals are certainly cause for concern as further consolidation means two major players control 95% of the OTA market, Priceline’s acquisition has the potential to revolutionize their marketplace. Darren Huston quite possibly just made the most brilliant move of any OTA in recent history. Yes, even more brilliant than Priceline’s acquisition of Booking.com during Jeff Boyd’s tenure as CEO.
Unfortunately, hotels just lost the direct booking war.
For those that aren’t familiar with the site, Rocketmiles is an OTA that includes additional airlines miles with each booking. Yes, you read correctly, additional airline miles for every hotel reservation, up to 5,000 miles per booking. In some cases, airlines miles are more valuable to the frequent traveler who is then willing to give up the elite benefits and points they would earn with a hotel’s loyalty program when booking direct.
For the OTAs and Priceline who have lackluster loyalty programs that try and compete with hotel chain programs, offering value beyond just rate on every single reservation not only creates a real opportunity to improve loyalty with current users but also expand their base significantly. That means if Priceline can offer airlines miles on top of every reservation, hotel loyalty programs start to lose tremendous value, especially when Rocketmiles claims their typicall traveler can earn up to 80,000 additional airlines miles annually.
The next step here is for hotel chains to determine if packaging airlines miles violates channel distribution and best rate guarantee rules as these rates are not readily available everywhere and gives Rocketmiles and Priceline an unfair competitive advantage.
Are you worried about a marketplace that can universally offer more than your direct brand.com website and own your most valuable guest — frequent business travelers — especially when they have scale and the ability to outspend on guest acquisition? If Priceline rolls the Rocketmiles platform into all bookings, this OTA has the potential to win the booking war unless hotel chains decide to terminate the relationship. Expedia will follow suit with the acquisition of PointsHound to remain competitive and further disrupt direct bookings.