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Merchant versus Agency Model

Scott Booker
Former President at Hotels.com

Learning outcomes

  • How Booking.com disrupted Expedia in the US with the merchant model
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Executive Bio

Scott Booker

Former President at Hotels.com

Scott joined Hotels.com in 2003 when the company was a Dallas-based startup. He spent 5 years in product and customer marketing before moving to SVP where he was responsible for the global website and product development. In 2012, Scott was then promoted to President of Hotels.com with full P&L responsibility. Scott previously spent 3 years at Blockbuster as Senior Director of Strategic Marketing for Blockbuster Online, the incumbent competitor to Netflix, where he was competing directly with the now video streaming giant. Read more

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Interview Transcript

Let’s step back to when you joined Hotels.com and evolved as a leader. What was your vision for that product, within Expedia?

That changed a lot in two, three years. When I started, we were pretty much still a start-up in Dallas. Honestly, Hotels.com, it started off as a call center business. It was originally called Hotel Reservation Network. The reason why it worked is because the original founders were able to go to the hotel groups, primarily the big chains and say, hey, I’ve got this small, opaque channel, phone, and I’m going to be able to sell a lot of rooms for you, if you’ll give us a discount. Give us a 10% or 15% discount and it won’t be visible. It won’t be widely shared; it’s only through this 1-800 number. We’re going to advertise it, but you have to call, to get it.

That’s how they started. Round the 2002, 2003 time period, they created their first website. At that point, consumers were starting to adopt internet technologies and come onto websites to do business. When I walked in the door, in 2004, we had a pretty rudimentary website. Maybe in the first three months I was there, most of the chains came back to us and said, now that you’re visible with these discounted prices, that’s not good for us. It used to be okay through the phone; now it’s visible. You’re hurting our business, our brand. They pretty much enforced a rate parity clause for us. They said that you can’t have a lower price than we do, on our own site.

Our strategy legs were cut right out from underneath us. We pivoted. It’s not too dissimilar to the positioning that it is today but, at that point in time, we had a small group of people that would go to each of the hotels we signed up, and they would inspect, if you will. They had a questionnaire that they would go and complete. It included food quality, cleanliness, level of luxury and all that kind of stuff. We pivoted and we went to a brand strategy of, we’re the hotel experts. We had a whole brand campaign that focused on being the hotel experts.

Over time, that continued to evolve. In the recent incarnation, it’s been up for eight years or so, which I’m sure you’ve seen Captain Obvious. Captain Obvious came about by saying, look, if you’re going to go book a hotel, why go anywhere else besides Hotels.com. It’s the obvious choice. That’s where it started from. Our positioning and strategy was really about, we have more inventory than anybody else; it’s in our name, Hotels.com, which was a brilliant stroke by the original founders, to go and get that URL really early. We have all the information and content you need to make a decision. So why go anywhere else; it’s the obvious choice. That’s where the business evolved, from strategy perspective. It’s been very successful for them.

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