KPMG Survey Assails Hotels' Best-Rate Web Guarantees

Hotels consistently are failing to deliver on their promise to post the lowest available rates on their own Web sites, a survey conducted by KPMG claimed.

The firm's Travel Leisure and Tourism Services tested 330 hotels worldwide and found that of the 43 percent that guaranteed their lowest rates via their Web sites, only 27 percent lived up to that promise. The hotel Web site proved the cheapest distribution channel for 19 percent of selected properties, with direct calls to the hotel accounting for another 14 percent and calls to a central reservation number accounting for 9 percent.

Indirect channels therefore quoted cheaper rates in about 58 percent of cases. Online agents were the lowest option for 36 percent of quotes and corporate travel agents for 22 percent. However, the methodology for the latter arguably distorted the findings. KPMG based the figures on rates it obtained from its preferred travel management company. These include KPMG's own negotiated corporate rates. Hotels do not claim their Web site rates undercut the negotiated rates they offer to corporate clients.

This caveat was most important in the U.S. market, where the TMC route proved cheapest for 46 percent of bookings. However, this was also the market where the highest number of hotels, 70 percent, offered a best-rate guarantee for their own Web sites.

The survey's findings may be regarded as an indictment of best-rate guarantees but the figures also show that the TMC channel is equally unreliable as a consistent source of the lowest prices. Julie Adams, U.K. travel manager for Bombardier, said it nevertheless remains worthwhile to push all hotel bookings through the preferred TMC. "I am not too concerned about the TMC being the odd £10 more expensive here or ?10 more expensive there," she said. "It is more important that I get the global data and that I have the security of knowing where our travelers are."

KPMG's figures make uncomfortable reading for hotels. "We were quite surprised," said London-based KPMG executive adviser Kerrie Osborne, who compiled the survey. "We really expected to see some movement this year but nothing has changed except for hotels making more guarantees on which they aren't delivering." In the same survey in 2004, only 30 percent of hotels made Web rate guarantees.

The survey revealed that only 1 percent of hotels offered price consistency across all direct and indirect channels. Only 17 percent were consistent across their three direct channels of Web site, calling the hotel and calling a chainwide reservations number. Osborne said there was less pricing disparity in the United States. "The U.S. is leading the way in controlling prices more effectively, but it is not there yet," she said.

Online agencies are undercutting hotels' direct routes most severely across the Atlantic. The online agencies proved the cheapest distribution channel at 44 percent of properties in the United Kingdom and 36 percent in the rest of Western Europe.

David Sparrow, Hyatt Hotels & Resorts area director of sales for the U.K. and Ireland, expressed surprise at KPMG's research, saying it did not tally with his own experience of making a lowest-price guarantee. "We get hardly any complaints, and those we do get are generally not comparing apples with apples," he said. "There are always going to be one or two that do slip through the net—for instance, we have a couple of properties that do not have single image inventory—but it is minimal considering the number of reservations we take on the Web today. We are very stringent on this."