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Too Big To Fail v. Too Small To Succeed

Jan 29, 13 Too Big To Fail v. Too Small To Succeed

So, I read recently about this little slice of paradise down on Mexico’s Caribbean coast. The Luna Blue Hotel, a boutique 18-room property, appears from its online presence to be so exclusive, you can only ever hope to get a room there. Is it frequented by Hollywood celebrities and captains of industry? Do proprietors Tony and Cheri Head cater solely to the jet-set? What could possibly account to my not being able to book a room there, ever, (even in the off-season) for the remainder of 2013?

To learn more, we need to go back to a simpler time, when small business owners assumed they could increase their volume by partnering with a large, corporate travel reservation site. To learn more, we have to go all the way back to October, 2011.

Way back then, the tourism industry was in fairly serious distress, what with the swine flu and the dueling narco-terrorists. Tony and Cheri Head, who had shuffled off Mexico way to realize their dream of working in paradise, looked out on the horizon and didn’t like what they saw. Their savior, their white knight, arrived and explained to them how entering into a partnership with Expedia could only help their ailing hotel. Like all great tragic literature, it was a single decision, made that day, which nearly destroyed the dreams and livelihood of the Head’s.

I’d love to tell you the relationship started off well. That Expedia and the Head’s enjoyed a honeymoon period, of sorts. But this story turns south almost from the word ‘go.’ Expedia, once signing the Luna Blue Hotel, began, in what were originally viewed as harmless, unintentional errors, misrepresenting the Head’s property. Some errors were easily dealt with, such as reaccommodating a guest because Expedia had given the wrong number of beds in a room. Other errors, like advertising that there was an on-site health spa, an amenity not found at Luna Blue, made for some interesting conversations at the front desk.

Despite this, the Head’s remained hopeful their partnership with Expedia would deliver travelers to their doorstep. They maintained a vigilance over their web presence and would submit errors to Expedia’s content department. The comedy of errors spun on. As one error was corrected, a new error was added to their Expedia page.

The Head’s did see their bookings experience an increase of between ten and 15 percent, so they decided they would take the good with the bad. For Expedia’s assistance in sending vacationers their way, Luna Blue would kick back 25 percent of the room charge. 75 percent of anything is far better than 100 percent of nothing.

Unfortunately, in August of 2012, just 10 months after entering into a contracted agreement with Expedia, the page for the Luna Blue Hotel went dark. There were no more Expedia reservations heading in their door. The Head’s attempts at seeking redress were met with officials from Expedia explaining there was nothing that could be done. I’m loath to say this is where the story takes on shades of “David versus Goliath,” but I think a better analogy might be “Evil Superman versus a sleeping 3-day old, premie infant with whooping cough.” But then, I have always had an affinity for hyperbole.

As I mentioned above, the Luna Blue Hotel is impossible to book for the remainder of the year. This isn’t because of the expense and exclusivity of this small Mexican paradise, but rather because Expedia has, upon fixing the issue, placed a block on the Luna Blue, forcing users of Expedia to book elsewhere.

This insidious act, however, didn’t just take the ten to 15 percent who had booked through Expedia or any of its affiliate sites. As many people will use these sites to research before they book, they were falsely told the Luna Blue had no availability. The Head’s cite their down bookings numbers, stating they have lost direct bookings as a result.

“We’re getting emails from people saying, ‘you know, we’re so sorry you were booked for that time, I booked another hotel,’ and we’re writing back, ‘we’re not booked!’” Tony Head told The Verge.

The Head’s tried, on several occasions, to contact Expedia, both via e-mail and telephone, since October of 2012. Despite repeated attempts at contact, Expedia was unresponsive. Expedia did, when asked for comment on this specific relationship, state, “Expedia holds partner negotiations as confidential, but can confirm Luna Blue hotel and Expedia are no longer working together.”

That seems like a great place to end a year-long antagonistic relationship. But this is where the actions of Expedia go from looking like simple mistakes to being downright rotten. Expedia never took down the page for Luna Blue. In fact, they fixed it and brought it back live with images and hotel descriptions and working hyperlinks. And then they cancelled all of the reservations made through their site, even those that pre-dated the dispute. Oh, and they did this without contacting either Tony or Cheri. The Head’s actually found out when they received an e-mail from a future potential guest who was inquiring as to why Luna Blue cancelled their reservation.

If only Expedia’s reprehensible behavior stopped there. After cancelling all of their reservations, Expedia sent a missive from their collections department, advising the Head’s that the responsibility for the “relocation fees” for the reservations fell squarely on their shoulders.

“They’re not getting any commissions off of me. They’re not making a dime off my reservations since they’re not making any reservations,” Tony Head said. “The only rational explanation is because it’s bringing people in looking for a small hotel like the Luna Blue, or looking for the Luna Blue specifically, and they get directed to a more expensive hotel. We’re one of the lower priced hotels in the area.”

Whether you try to book on the web or via telephone, Expedia informs you the hotel has no availability for your dates and then tries to re-direct you toward a more expensive property. This is, I believe, the classic model for a bait-and-switch. And I’m not saying this is common practice for Expedia, but they were, in 2011, fined an estimated $486,000 for misleading marketing in France. Cited specifically was their propensity to display a property as full on certain dates when there were rooms available, before steering users to other properties that were on better commercial terms with Expedia.

Tony Head, prior to setting off for the sun and sand of the Riviera Maya, was a trial attorney for some 30 years. He knows just how exorbitant the cost would be in bringing litigation against Expedia. So, for now, they are using back channels to find some relief. In addition to filing complaints with local Mexican agencies and the Federal Trade Commission, Tony and Cheri also penned a blog post on their hotel website. Posted in December, it took just a few weeks, Christmas Eve, in fact, for their screed to attain viral status. In just a short time, the blog post had received over 500,000 views.

Expedia, not wanting to get into a scrape with a minor and independent hotel, has remained very tight lipped about the whole affair. They did, however, respond to the situation with the Luna Blue with the following statement:

“Expedia partners with hotels to capture bookings across the globe through technology, diverse brands, powerful marketing, and market insight. We are confident in the value that we offer our more than 160,000 hotel partners including over 300 properties in the Riviera Maya region. It is very unfortunate if any partner is unsatisfied with our services. However, we strongly believe that our growing relationship with such a large number of properties is a testament to our trusted capabilities and the professionalism of our Market Managers.”

Tony and Cheri have posted an interesting post script to this whole situation on their hotel Website. In it, they thank those who not only offered well wishes to them, but also to those who helped in disseminating their December blog post. They also mention how, despite their officially ended affiliation with Expedia, the damage is still continuing. And they finish with advice for the traveler on how to research and book future travel to ensure you get the accommodations you want and not the ones you are shuffled into by a large, faceless, monolithic corporate entity.

The good news can be found as a direct result of the goodwill the Head’s have received after having taken their case to the court of social media. In addition to a flood of e-mails from concerned individuals, the hotel has experienced a reservations boon. This is a result of not only direct booking, but also due to several travel agents who have reached out to the Blue Luna, working to send travelers who place value on both affordability and extra attention. The Blue Luna hotel is located just a couple of blocks from the warm Caribbean beaches and has a strict age-restriction policy, ensuring a more relaxing experience for the discerning guest.

Image Credit: Pavel V Mukhin / Shutterstock

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