Hilton Hotels: Friend or Foe?

Jul 12, 03 | 2:25 am

Hilton Hotels and Resorts and Hilton International have recently come under sharp criticism from tour operators and travel agencies throughout the United States for its alleged confusing rate structure. Both of the Hilton Hawaiian Village and Hilton Waikoloa Village, as well as various International Hilton owned properties have, for years been accused "talking out of both sides of their mouth" in its dealings with its various distribution channels. Criticisms have flared-up anew within the travel trade community because of Hilton's alleged continued practice of issuing contracts to its large wholesalers that are far higher than rates found on both the Internet and directly through the Hilton's direct reservation center.

Traditionally, wholesalers have provided 60 to 70 percent of all room revenue for tourism driven destinations such as Hawaii, the Caribbean and Europe. Large wholesalers such as Happy Tours, Blue Sky Tours, and Classic sell exclusively to retail travel agencies, who in turn market direct to the client. For years these wholesalers guaranteed that the rates offered to the retail agency community would always beat or match the "rack" rates offered by the hotel directly. In addition, wholesalers served as a marketing source for Hilton along with many other chains and independents throughout the world. This "unwritten" rule has been trampled over by Hilton Hotels in recent years. For example, a room at the Hilton Hawaiian Village from wholesale provider Blue Sky Tours from Dec. 20 to 27would cost $298 per night. The rack rate on the same room would be offered at $310, but when calling the hotel and asking for the lowest rate it is sold to the client at $189 plus taxes. This policy seems to be the trend among Hilton Hotels and directly circumvents the client-agency relationship.

"While Hilton Hotels appreciates the support of the travel professional, it cannot write the policies of any said Hilton Hotel," Hilton Public Relations Representative Jeanne Detz stated when asked to explain these policies. Detz also mentioned that Hilton has recently implemented a policy which guarantees that the lowest rates will always be sold through its website directly to the general public. When asked if this does not counter the purpose of wholesalers and retail agencies, Detz said that Hilton sees a need for agencies as a niche market distribution source, but "no longer follows the procedure of guaranteed lower than rack rates." Detz added that "any rate offered by Hilton Hotels directly would be honored at a full 10 percent commission to the retail agency."

Interestingly, it has been recently learned through Hiltons own solicitation that Hilton Hotels and Hilton International will now require agencies to have either an IATAN number or a "pseudo Hilton IATA number" in order to receive any commission from its Company. This pseudo IATA can be "purchased" according to the mailed document for a cost of $25 for a "one-time set up fee" and an "annual fee" of $65.00 for all U.S. based agents. Non-U.S. agents are charged no "set-up fee" but charged an annual $30 fee. The document goes on to say to refer to www.iatan.org for U.S. based set-up or www.iata.orfg/tids/promotions.htm for non-US based agents. When Detz was asked about this policy and questioned why U.S. based agents would be charged more, she indicated that the matter was going to be investigated. eTurbo News followed-up one week later and Detz stated she was then "too busy to further investigate this policy" and offered no immediate answers. These fees have further enraged an already beleaguered travel trade industry. "Why should we have to pay fees for the right to put people in Hiltons Hotels?" asked Sean Bussion of an American Express affiliated agency based in Pennsylvania. It appears that the same sentiment echoes as a general response among travel trade professionals. The cumulated effect of both underselling direct through phone and through the Internet and the added "fees for commission" policy of Hilton has raised the obvious question: "Why should the travel trade professional continue to support Hilton Hotels?" When Detz was asked this question she offered no solution and again stated, "We understand your concerns, but we don't see our policy changing in the near future." eTurbo News will continue to follow this story and encourages your comments.