Repeal of Net Neutrality and Its Implications for Hotel Marketing

Before the holidays, HSMAI’s Digital Marketing Council joined in an exchange on the topic of the recently repealed net neutrality and its implications for hotel marketing.

Asked how could/would changes to net neutrality affect hotel marketing in terms of ad buys, and what about dissemination implications, the consensus was, from a marketing perspective, the repeal of net neutrality has the potential to dramatically increase costs associated with certain channels and affect dissemination.  There’s a certain regionality associated with Internet distribution in-market, so if you don’t have a strong relationship with the provider you’re using to infiltrate into that market, you could see some substantial cost increases just to push into that market.

Take for example a major hotel chain…with its voice and power it could influence what exposure it has, and others have,  in certain media mediums through a preferential relationship with the Internet service provider in that market.  Independent hotels may not have the purchasing power and influence with that carrier provider, so they wouldn’t show up in advertisements or would be slow to show up in that which is available in that market.

Some examples might be that, for instance, Bing might want to make a play for the northwest, so that their browser would then generate more results with more speed than Google.  Or, for instance, YouTube might allow for a video to be played that has an ad corresponding to a preferred vendor, while another video might not be available if it wasn’t connected to a preferred vendor.

How did we get here, you may ask.  For some background, the net neutrality question started about 12 years ago with Mission River Communications, an Internet service provider in North Carolina, which also sold telephone service.  At the time there was a dispute with Vonnage, the voice over IP company. Mission River Communications decided to just block voice-over-IP traffic and force people to use telephone service through Mission River Communications.  Vonnage took exception to that.

Under the Obama Administration, Internet service providers and broadband carriers became  Title II entities, which are common carriers, and that means they cannot discriminate as to who uses their services — they have to provide them for all. That fundamentally stops with this repeal.

Now with the repeal of net neutrality, if a large hotel company has a relationship with an Internet service provider, they might say, ‘You as our Internet service provider should block any advertising from any other hotel company websites.’  Would a company do that?  Maybe not, but they can.  Will people start behaving improperly basically they have the power to do so?  After the repeal, if they disclose it, say yes they are blocking, then it’s not a problem with the FCC.  If you don’t pay the person that’s distributing, you don’t get distributed. The wall that prevented that goes away.

Just as the Digital Marketing Council was discussing this topic, the FCC voted to repeal net neutrality on a party-line vote – 3 Republications voted for repeal and 2 Democrats were opposed.  The Internet superhighway now has toll gates that have been built.  They may not be collecting tolls yet, and how the tolls will be applied is just dependent on the creativity and the market dominance of companies who are seeking return for their shareholders.  This, the Council agreed, is a little scary.

Could marketing costs go up – yes! Think of it like newspaper. The provider could say if you want your ad in a certain region, it’s one price, and if you want it national, it’s going to be this cost.  We are so used to being able to advertise openly in any market we want. We could be throttled into a position where the provider would set costs to distribute to this market or that market, to this demographic or that demographic.  And, remember, the IP providers know more about us than anybody – they have the data. So they’re able to segment farther and more robustly than anyone, and they will be able to offer a catalog of services for sale.  As long as you have the money, you’ll be able to get in front of anyone you want.

One of the biggest threats may be if one site loads a second faster than another, and then that one loads a second faster than a third…consumers are often using their phone and want instant gratification.  What will they choose?  It could reduce traffic and coordination tremendously and simply put you out of business. So all of these questions are very problematic.

You may ask, who was for net neutrality being repealed? The ISPs and the telecoms.  Nearly everybody, including Google, was against it except the ISPs. Some surveys show that 83% of the country was against the repeal.

There is some action being planned against the ruling. There is a bill in the House of Representatives to overturn the repeal, and lawsuits will be filed. But what should a hotel do now?  There’s not much they can do – it’s early and nothing has happened in the marketplace yet.  But it could, and it will.  All we can do is wait and watch and be prepared as best as possible.

About HSMAI’s Digital Marketing Council

HSMAI’s Digital Marketing Council connects travel marketers in a way that leverages interactive customer engagement as a marketing medium while increasing the awareness of emerging issues, opportunities and trends. This is accomplished through a wide range of information sharing, networking and educational opportunities. Members include:

  • CHAIR: Holly Zoba, CHDM, VP, Signature
  • Dustin Bomar, Head of Industry, Travel, Google
  • Aimee Cheek, CHDM, Director of eCommerce, OTO Development
  • Bill Clarke, Director of Sales, Milestone, Inc.
  • Robert Cole, Founder-CEO, RockCheetah
  • Chris Copp, VP, Global Digital Marketing, IHG
  • Jessica Davidson, Vice President, Digital Content + Creative, Wyndham Hotel Group
  • Erica Eyring, CHDM, Director, Account Management, Expedia Media Solutions
  • Isaac Gerstenzang, CHDM, Assistant Vice President, Corporate E-commerce, Two Roads Hospitality
  • James Hansen, CHA, CHDM, Director, Marketing, Best Western Hotels & Resorts
  • Carolyn Hosna, CHDM, Sr. Corp. Director, Marketing & Distribution, White Lodging
  • Jay Hubbs, III, CHDM, Senior Vice President, eCommerce, Remington Hotels
  • Michael Innocentin, Vice President, E-Commerce & Digital NCA Region, AccorHotels
  • John Jimenez, CHDM, Director of E-commerce, Interstate Hotels & Resorts
  • Sarita Mallinger, Regional Director, Digital Marketing, Kimpton Hotels & Restaurants
  • Delana Meyer, CHDM, Vice President Digital Strategy, Crescent Hotels & Resorts
  • Amy Mierzwinski, CHDM, Director, Horwath HTL
  • Anna Paccone, CHDM, eCommerce Director, Second Wave Marketing / Aimbridge Hospitality
  • Shawn Paley, CHDM, Director, Global eCommerce & Digital Services, Marriott International
  • Olga Peddie, SVP, Client Strategy & Success, Cendyn
  • Donna Quadri-Felitti, CHDM, Director and Associate Professor, Penn State University
  • Mariana Safer, CHDM, Senior Vice President, Marketing, HeBS Digital
  • Dave Spector, Partner, Tambourine
  • Dan Wacksman, CHDM, SVP, Marketing and Distribution, Outrigger Hotels & Resorts
  • Hunter Webster, CHDM, SVP, eMarketing, Interstate Hotels & Resorts
  • Misty Wise, CRME, CHDM, Director, Digital Strategies, John Q Hammons Hotels


Categories: Marketing, Internet & Social Media
Insight Type: Articles