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When they began, online intermediaries helped hoteliers (who often did not even have a website) and could be a useful way of disposing of excess inventory. However as more and more people began using intermediaries to book their travel and accommodation needs, the power of these

Make sure that you know your demand patterns before using an intermediary - and only use them to fill rooms that you can't fill otherwise.

In many ways online intermediaries are now competing with hoteliers for bookings - with every booking through an intermediary costing the hotelier a substantial commission. Even worse, the online intermediaries have become so powerful that they can demand a substantial price discount from hoteliers.

Of the online third party intermediaries, seven dominate the market. These are Hotels.com, Expedia, Travelocity, Priceline, Orbitz, WorldRes and Hotwire. Of these, Hotels.com, Expedia and Travelocity account for 74% of the market. But these are not the only websites through which the intermediaries take bookings. They have an extensive network of thousands of associated and affiliated websites, all of which stream hotel information - and bookings - to them (Hotels.com alone has over 34,000 affiliated websites).

The advantage that third party intermediaries lies in their online presence and their marketing. In many markets specific searches for a hotel or destination won't bring up local hotel websites but the intermediary websites - a disastrous situation for a hotelier. Every booking that comes directly to you through your own website is worth 10 or 20 percent more than an equivilant booking through an intermediaries - and gives you greater control over your pricing. For a growing number of hotels this is a matter of survival.

However there are several ways in which you can compete with third party intermediaries and even profit from using them:

1. Develop an excellent online presence and market your property effectively on the Internet. If you have an excellent website that gives customers plenty of information and allows them to make a reservation with you quickly and easily, and if you market that website effectively so that people seeking accommodation at your destination can find it easily, then you will take business from the intermediaries and capture it directly.
2. Never allow your prices on rooms available through intermediaries to be the lowest prices available. If people can get cheaper prices through an intermediary than they can get from your website or your front desk then that's what they will do. Keep control of your prices and make sure that the lowest price available is the one on your own website. If an intermediary requires a discounted price (as Hotel.com and Expedia's TravelScape do, for example), then don't use them. Discounting your prices may give you a short-term fix, but it is suicide in the long term.
3. Use intermediaries only to get rid of your distressed inventory. If a room is going to be empty anyway, then let an intermediary try to sell it, but only then. This means that, to use intermediaries you must (a) have a very good knowledge of your demand patterns, and (b) do everything you can to fill rooms in other ways. Exhaust all other opportunities first and consider intermediaries a last option.
4. Above all, never, never allow online intermediaries to be your primary or only Internet distribution channel. Recognise that they are your competitors on the Internet - and compete with them.

If you must use intermediaries, pick and choose which ones you use carefully. There are three 'models' of intermediary.

1. In the agency model you set the prices and the intermediary acts like a travel agent, collecting an agreed commission. The agency model is the most advantageous to the hotelier because it allows control over pricing. Expedia still use the agency model but is promoting the merchant model through its subsidiary, Travelscape.
2. In the opaque rate model customers suggest a price they are willing to pay for a certain date, star quality of hotel and destination. The actual hotel is not disclosed until the purchase is made. The intermediary adds a relatively small margin to the hotel's net rate. The main intermediaries that offer this model are Priceline and Hotwire.
3. In the merchant model the intermediary requires a negotiated percentage (usually 20-30%) off the lowest publicly available price to the general consumer. Hotels agree to a negotiated minimum room allocation per night. The merchant model is the worst of the three, as the contract agreement usually requires you to discount substantially. You should stay away from merchant model intermediaries if at all possible, including Hotels.com, Travelocity, Orbitz and Travelscape, a subsidiary of Expedia.

On average, online intermediaries account for 47% of all online hotel revenues, with 53% coming from direct-to-consumer sales via the hotel's own website. At the very least your target should be to meet or better this average. Every online booking that you move from an intermediary's website to your own website means more profit and more control over your business.

1. Understand the danger of becoming reliant on online intermediaries. 2. Maximise your use of other distribution channels. Only use intermediaries as a last resort. See how Hotel Sales Online can help. 3. Know your demand patterns before using any intermediary. 4. Learn about the online intermediaries. Download a report, read an article and review intermediary websites. 5. Keep control of your prices. Make sure that you are offering the same prices across all your distribution channels - and never allow an intermediary to sell your hotel rooms at a cheaper price than the one you offer on your own website. 6. Commission Hotel Sales Online to do a comprehensive audit of the exposure of you and your competitors on the main intermediary websites.

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