Uber makes nothing selling your hotel, and that's the point
Uber hands its hotel margin back to Uber One members. The 20 percent off comes out of yours.
by Markus Busch
A guest checks in on a Thursday. The booking on your screen says Expedia. It came from the Uber app, and around the time she hands over her card, Uber drops 10 percent of her stay into her account as Uber One credits. The loyalty number on her folio stays blank. Uber's help page says hotel loyalty accounts can't be linked.
On stage at the Skift Global Forum in New York on September 22, Uber CEO Dara Khosrowshahi said the company is breaking even on hotels: "whatever money we're making from hotels, we're handing back" to members. He can afford that, he said, because Uber doesn't have to buy its traffic from Google. Your room isn't what Uber sells. It's what Uber gives away to sell a $9.99 monthly membership.
Not only Uber. Revolut's paid-plan terms list cashback on hotel stays among the benefits of paying for a better bank account. Airbnb put hotels in its app to stop travelers leaving it, and pays guests on featured hotel bookings up to 15 percent in credit toward their next Airbnb home. By Brian Chesky's own count, one in three first-time guests who book a hotel come back for a home.
Three apps. A membership, a bank account, a rental. The hotel is the free gift in each box.
A seller that makes nothing on the room has no reason to show what makes yours different. It shows what the member saves.
Who pays for the gift. The 10 percent back is Uber's cut, returned. The 20 percent off is something else. It runs on a rotating list of more than 10,000 hotels, and Forbes reported in August that hotels opt in to those promotions, with Expedia's system choosing which participating properties appear. Amit Fulay, Uber's VP of product, told Forbes that Uber puts some of its profits into member discounts.
Some. The rest of the discount the member sees is a rate you set.
The parity math, and why your direct site can't match that price, is in our May piece.
What to do. Pull every promotion you've opted into on Expedia and write down what each one costs you per night.
At the desk, give the Uber guest the things Uber can't: her name on arrival, your own points, the room she asked for. Ask where the booking came from at check-in, so you know which guests arrived as someone else's gift.
What it buys. A guest who arrived as someone else's perk and leaves known by name can come back to you direct. One who leaves with nothing but Uber credits comes back through Uber, because that's the only place the credits work.
The limits. "Breaking even" is a claim from the stage, backed by Fulay's remark to Forbes, not a filing. That hotels fund the 20 percent is Forbes's reporting, not Expedia's documentation. Uber's hotel benefits run in the US and Canada only, and Uber is still small next to Booking.com.
Then take that list to your Expedia market manager and ask which of those promotions put your hotel on Uber's 20 percent list. Each one that does is a discount you pay so someone else can sell a membership.
Read also: Your direct rate is no longer the best rate · Airbnb added your hotel to stop travelers from leaving its app
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