Hotels do not need corporate deals any more, Jean-Paul Herzog, senior vp Nordic for Hilton and Scandic Hotels, told the ACTE Forum in Stockholm.
He said that hotel direct booking sites, the de-regulation of GDSs and the increased use of spot prices will change hotel selling patterns.
“That means very likely that we shall see an end to corporate agreements. If we see the best rate available, there should not be a need for a corporate agreement. Anyone can see what is the market price of a room and that is what you are buying,” Mr Herzog said.
“If the market does go direct and goes for spot or daily prices, we really can't have corporate deals.
“In 50% of the cases it would disappoint my corporate partner because the deal would say a room was $100 while others could get it for $50 and in 50% of the cases, it will disappoint me because they get it for $50 while I could sell it for $100. It is a relationship that is doomed to fail.
“It is the difficulty of a relationship based purely on price rather than on what each can bring to the table which is of benefit to the other.
“Hoteliers need to reduce the number of corporates they have deals with, deal with only those which have 10,000 or 20,000 rooms and have something different for the SME market.
“Attempts at these models would make sense and there are tools around which make sense for both them and for us.”
Mr Herzog, speaking in the panel discussion on the Total Cost of Travel, said hotels had won a battle against “intermediaries” in the last three years and he no longer felt “our inventories are being kidnapped.”
Hilton had now invested $13m in five websites and de-regulation of GDSs in Europe, when it came, would mean extra costs.
“I don't like paying GDSs and we also need to be clear about the message that we are sending, about establishing price transparency,” he said.
With spot prices, this could mean that a room cost $50 one day but $200 the next “because we are selling availability.”
Earlier, Hans Holmen, managing director of BTI Nordic, said that travel was the only private industry where service was expected to be free. “This madness must stop,” he said.
“People must expect that cost levels should be linked to the travel process. The industry has partly itself to blame but we must look at the real cost of travel.”