Star-Rated Hotels Are Going Online to Win Guests Back. Can They Pull It Off?

We tested the websites and apps of Marriott, InterContinental, Hilton, Starwood and Hyatt. Here is what we found.

The war between star-rated hotels and third-party booking platforms is drawing closer.

In the end it comes down to who has the say with consumers. In the days before the internet was this developed, online agencies like Trip.com Group and Booking simply meant a more efficient sales channel: they could reach more users and bring hotels more bookings.

Now star-rated hotels worry they are drifting away from their customers. Look at Hilton's advertising: "Stop Clicking Around" — the biggest marketing push in the chain's 97 years. Marriott is doing much the same, under the line "It pays to book direct."

Star-rated hotels can offer more personal service and better facilities, but third-party booking trains people to look at price alone, so their willingness to pay for those extras drops to almost nothing and the differences between brands stop registering. This is the same bind luxury retailers face with e-commerce channels: the channel you run yourself delivers the experience, while the other one brings far more people through the door, at the cost of some of that experience.

With this new generation of customers, star-rated hotels have at least two puzzles to solve: how to make consumers notice what is distinctive about them, and how to hold on to those customers the moment they show a flicker of curiosity.

Third-party booking platforms, by contrast, are a place consumers know well, and they have been fighting a price war for users for years. Hotels have complained about the pricing system for a long time, yet they still hand a sizeable share of their rooms to third-party distribution, for no reason other than keeping vacancy rates down.

Now they have worked up the nerve to promote their own service, hoping to pull you past the third parties and into booking direct: free Wi-Fi (hard to believe this counts as a perk), your choice of room, members-only rates and so on. Emily Chang, chief commercial officer for Greater China at InterContinental Hotels Group, told QDaily that the company wants to promote its own booking channels as much as it can: "For instance, we have kept improving the experience of our website and mobile app in recent years, and of course there will be more to come."

Third-party platforms keep getting bigger: Trip.com Group and Qunar have merged, and so have Expedia and Orbitz. The research firm Phocuswright reckons that after buying Orbitz, the combined Expedia will control roughly 75% of the U.S. online booking market, which could change hotel commissions dramatically.

That is why every star-rated hotel now "has an app." Building a direct channel on the phone is probably not only a way to fight back against third-party booking platforms; it also caters to the habits of younger users. What this direct-booking campaign will actually achieve, no one yet knows.

So let us begin with the most basic step and look at the experience a consumer gets when booking a star-rated hotel. Budget hotels are outside the scope of this review: they are what price-sensitive users choose, and they are the category third parties have firmly locked down.

We tested the websites and app booking systems of Marriott, InterContinental, Hilton, Starwood, Hyatt and other hotels. Here is what we found.

Which online channels and payment methods can you use to book rooms at the big five hotel groups?

Start with where hotels have laid out their direct channels across the internet: chasing breadth, the major brands have claimed every spot going. The chart below shows where people can book a room and how they can pay.

The brand flagship stores on Tmall are tied to Alitrip and are a special case, so we will set them aside. That leaves three main direct channels: the website, the app and WeChat.

Third-party platforms offer plenty of ways to pay, including the most convenient one, a jump straight to Alipay or WeChat Pay. Hotels' own channels, by comparison, take nothing but credit cards, with a single exception: you have enough membership points to redeem a free room.

The direct channels use three things to attract consumers: a best-rate guarantee, added services such as free Wi-Fi, and membership points. Compared with those two less visible benefits, price is still what matters most to most people.

Hotels say booking with them is cheapest. Is it true?

We searched prices at four hotels in Shanghai, Xiamen, New York and Bangkok — cities at home and abroad, for business and for leisure — to see whether booking through a hotel app really does get you the best rate.

The check-in dates were May 1 and June 1, a short holiday and a working day. We ruled out any discount, points policy or difference in service within the same room type that might affect the price, and looked only at the room's lowest price.

There is also the case where you need a room for the next day, or even the same day, at short notice. So we looked at which online channel is cheaper then, too.

We picked six Shanghai hotels at different price points, checked prices on the night of April 27 for a room the following night, and got this:

At the Westin Shanghai, Starwood's own app had only the "Crown Deluxe Room" for sale — the "Luxury Deluxe Room" at the same price had sold out — yet you could still find that room type on third-party platforms (useful if you have strong feelings about the shape of a bathtub).

On this limited evidence, every lowest price shown came from a third-party booking platform.

The hotels' "best-rate guarantee" means the group promises that a customer who books through a direct channel gets the lowest price anywhere online. If you find a lower listed price elsewhere, you can file a claim and get a discount, a free night, cash back or membership points.

In practice the guarantee does less to guarantee the lowest price on the website or app than to give the hotel a chance to handle a complaint. The conditions for a claim are usually strict: room type, services (breakfast, internet and the rest) and the booking and cancellation rules must all match exactly before you are compensated.

To borrow a reply posted online by "Jasmine," a customer service agent for IHG Rewards Club, InterContinental's loyalty program: "Bookings made through third-party channels do not earn IHG Rewards Club points or qualifying nights."

In other words, if you book at very short notice, or the hotel fills up that day, the hotel looks after the guests who came through its own channels first. Direct sales, hotel direct connect (a third-party platform's booking system wired straight into the hotel), agency bookings, wholesale rates — these different ways of selling are the first reason room prices are opaque.

Of the 14 lowest prices in the chart, most gave up some service, demanded payment in full upfront, or came out of the agent's own pocket. At the Hilton Shanghai Hongqiao on June 1, for example, only the app's booking included free Wi-Fi; every other channel did not. The lowest price for the W Bangkok on Trip.com Group carried this note: open only to guests holding a Chinese passport.

A stranger factor was the switch from business tax to value-added tax that took effect on May 1, which added 6% VAT to hotel bills. Some sites had not yet spelled out the charge, which added to the confusion.

To be fair, a hotel's direct price can in theory be the "best rate" when the level of service is the same. But hotels cannot stop third parties from cutting service to chase a lower price, especially at the May Day peak. Looked at the other way, that also shows the direct channels are not flexible enough.

Hotel apps, meanwhile, will encourage members to pay a little extra on the room rate in exchange for more points. That one option alone already makes direct-channel prices complicated.

Most hotel apps handle Chinese badly

Ranked by how thoroughly they have been translated into Chinese, best to worst: Starwood, InterContinental, Marriott, Hyatt, Hilton. Hilton's app is simply all in English.

Once you are a member, booking through a direct channel lets you join the points program and trade points for rooms. So the first step is signing up, and the details of the Chinese version decide how smoothly that goes.

Hyatt and Hilton accept only a name in Pinyin or English at sign-up, but say so nowhere, which is unfriendly to a new user. Starwood, by contrast, turns the Chinese name you type into Pinyin automatically.

Marriott's app has been translated only in the main menus and the hotel listings. Reach the hotel overview or the room descriptions and the language falls apart, especially at properties abroad.

Where does booking direct fall short of the third parties?

Hyatt fails at sign-up — registration goes through but you cannot then log in, and its app has the lowest App Store rating of the five. The other four hotels each take four or five steps to book a room, which on that measure alone matches sites like Trip.com Group and Qunar. In practice, though, you cannot settle everything inside one app the way you can on Trip.com Group.

The trouble comes at the step where you pin down a particular property. We are usually not that familiar with a destination when we travel, and there are three common cases: you have a specific office or sight to get to and need a hotel in that area; you want to stay downtown; or you want to search for hotels nearby.

But a hotel app's grasp of location stops at the city, and apart from Starwood none of them lets you search a city name in Chinese. You have to type "Shanghai" in Latin letters, not the Chinese characters.

We interviewed the travel expert @Xiaofanyaoyuanhang, an elite member of InterContinental's program who still turns to Trip.com Group to find a suitable hotel in a city he does not know, and only then goes back to the hotel's own site to book. This is probably the most troublesome part of booking a star-rated hotel direct today.

The next best thing the apps offer is "map mode." Search loosely for "shanghai" in InterContinental's app and it lists every hotel in the city; you then switch to the map to work out where each one is. That has something to do with how few properties a star-rated chain has in any one city in the first place: Hilton has four hotels in Shanghai in all.

On Trip.com Group, by contrast, you can pick a city, a landmark or a street name, look at a map, or search a hotel by name. That is the standard third-party sites have already reached, and to young users used to that convenience, hotel apps are not much fun to use.

A few details worth noting:

• Try to book a Ritz-Carlton, one of Marriott's brands, and the app throws you out to a webpage to finish the booking, probably a symptom of how the company is organized inside.
• Marriott and Hilton let you log in with Touch ID.
• All five apps had been updated within the past two months.
• InterContinental's app cannot run in the background. Slip back to the home screen and you start again from the top.

WeChat is the last channel, and the most "fashionable" while being the least useful. The brands push hotel promotions and brand images there tirelessly and often, but there is little genuinely useful service. Letting customers book a room on WeChat is, for now, a fairly pointless feature: first, it throws you out to a mobile webpage to book; second, once you have booked, three of the five service accounts cannot tell you the status of your room.

If it is not that convenient, what are hotel apps counting on to win you over?

Booking a room seems to be only about a third of what these apps do. The other two-thirds is the loyalty program, plus brand promotion and marketing.

Last year Marriott International said its mobile sales revenue passed US$1.8 billion, 19% of its total digital revenue. InterContinental Hotels Group reported app downloads up 50% in 2015, bringing in more than US$1 billion — announced alongside a worldwide membership of 92.5 million. To sweeten the rewards for its elite members further, IHG added a new top tier to IHG Rewards Club in the first half of last year.

That is largely what a hotel app is for now. Set against all the slips in the booking process, the membership pages and the account of member benefits in these apps are actually clearer than they are on the websites. Put plainly, this is the basic instrument for making you feel special.

Ideally, if your job has you travelling and staying at star-rated hotels often, you pile up points easily, become an elite member and redeem free rooms for yourself — a hidden benefit.

Inside this system, the hotels you can redeem are sorted into tiers by brand and market position: one Sheraton might be tier 2, another tier 5. And because your points pass through several unit conversions, they tend to get lost in the arithmetic.

A recent study by the market research firm IdeaWorks worked out the return rate of each of the big hotel loyalty programs in detail. Marriott came first at 9.4%: spend US$100 at Marriott and the points you earn are worth US$9.40. Then came Hilton (8.9%), InterContinental (8.6%) and Starwood (6.1%).

The problem is that young travellers today care less and less for points that pay off this slowly. Thom Kozik, the Marriott vice president in charge of the loyalty program, put it this way in an interview last October: "We have to find another way to cash out value for you faster." In future, for instance, those points might be spent directly in shops near the hotel.

Back to reality. If you have just signed up as a member, the only added services you can enjoy at once are free Wi-Fi and a smart room key.

Free Wi-Fi has long been a myth at star-rated hotels. A survey of 2,391 travellers by the consulting firm Resonance in January found that people earning more than US$200,000 a year rated their satisfaction with "free hotel Wi-Fi" very low — which means that now most budget and mid-range hotels give Wi-Fi away, even the rich are unwilling to pay for it.

Free Wi-Fi is less a member's perk than a basic entitlement that arrived late. Even on this one service, star-rated hotels still do not offer it across the board.

In the end, what hotels lean on hardest at this stage is still their own sprawling loyalty programs. Their advantages elsewhere have yet to show.

Online service was the third-party platforms' own field to begin with. Booking launched BookingSuite for small hotels last April, building websites for owners who cannot develop an online business themselves and giving them revenue management tools. Brian Saab, Booking's global marketing director, said at the time: "Some hotels have no online business at all, and some need to improve."

In fact a good app leaves plenty of room to imagine. Think of features for business travellers: tick a box on your phone for an invoice after booking a room, or use a corporate account to make expense claims easier. How do you deliver service on a phone that says what it means, and conveys the attention to detail that sets a star-rated hotel apart from everyone else? If the hotels treated the app as a way into service rather than only a sales channel, it might appeal to users a good deal more.

(Graphics: Lin Yuyao)