The dirty little secret of online travel sitesNovember 23, 2011: 10:03 AM ET
The holidays are upon us, so it's important to know that hotel room you booked online may not be yours after all.
By David A. Kaplan, contributor
FORTUNE -- So, what nightmare did you celebrate on Halloween Weekend? My family's was neither imagined nor fun: There had been a freakish winter snowstorm in the Northeast and many homeowners lost electricity in their homes due to downed power lines. At our house in the New York suburbs, we did fine the first night with blankets. But the next night, it was 26 degrees outside and barely 50 indoors.
We logged on to Expedia -- the largest online travel agency -- and were lucky to find a reservation at a Hampton Inn eight miles away. But when we got there, the hotel had never heard of us. It didn't matter that I had an Expedia reservation number -- I didn't have anything from the hotel chain itself. "You're the second person tonight this happened to," said the hotel manager.
It's the dirty little secret in the world of the online travel agencies. No matter how you make your reservation, you always run a tiny risk of arriving at your hotel and finding it overbooked -- just like an airline may not have that seat it promised. But there's an additional risk when you use a third-party provider like Expedia or Travelocity or a range of other companies. If its software doesn't properly hook up to the hotel's electronic booking system, you don't have the room the site claims you reserved.
That's what happened to me. In fact, that Hampton Inn hadn't been taking reservations since that morning, yet Expedia was accepting reservations for it.
An Expedia executive told me its website was hit with extraordinary demand that weekend because of the storm. "We have technology set up to ensure that what happened doesn't happen," says Thomas Siebert, senior director of customer service at Expedia. "It has to be that either of the two inventory systems -- ours or the hotel's -- became overwhelmed." He says such occurrences are "very, very rare," but can happen in a "technology environment" when there are "hurricanes, blackouts, or volcanoes." Which of course is precisely when customers would hope that a large online booking system would work properly.
In our situation, the hotel called Expedia and then Expedia (EXPE) called me, only to say there was nothing to be done but that Expedia would be willing to refund my deposit (you know, for the room we never got). Siebert said the Expedia system failed doubly because the company should have figured out how to find us another hotel property, even if it were many miles away. Only through luck did we wind up getting into the hotel some time later, after another family canceled their stay because their power had returned.
To its credit, Expedia acknowledged it messed up -- and noted it could happen again, all the more since Seibert says Expedia can't identify the "root cause." (Nor could the hotel chain, according to a spokesperson.) And Expedia, with $26 billion in gross bookings last year, isn't alone. Hotels.com, owned by the same parent as Expedia, has the same computer system, according to Siebert.
A representative for Travelocity says "a fraction of overall bookings" get dropped. Similarly, at Orbitz (ORBT), says a spokesperson, "there may be special circumstances when availability is changing so rapidly that the hotel's reservation system is not updated fast enough." By contrast, a Priceline (PCLN) spokesman says the problem couldn't occur because customers receive the actual confirmation number provided by hotels; Priceline customers would then have no more chance of being victimized by a computer system than if they just reserved directly at the web site of a hotel.
The lesson here is not to have blind faith in technology. If you use third-party reservation systems -- and millions do -- it never hurts to check directly with the hotel you booked. Especially if it's on the night of a big snowstorm.