In what could potentially be a line in the sand moment for hotels and booking engine giant – Expedia; Hyatt Hotels are threatening their imminent departure.

Tired of the large fees it pays to the online travel giant in exchange for bookings, Hyatt is threatening to leave by July 31 if the high commission rates aren’t cut.

The fall out, first reported by Hotels Magazine, could be the first of more contractual disputes as the hotel industry pushes back against Expedia, Priceline and other so-called online travel agents, or OTAs.

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According the New York Post;

“The tension between the OTAs and hotels is increasing because the OTAs have been growing market share,” said Cowen analyst Kevin Kopelman, who estimates that up to 10 percent of Hyatt’s business is derived from Expedia bookings.

“It’s too early to tell whether other hotels will follow Hyatt’s lead,” Kopelman added, “but over the past 18 months, the OTAs have increased their market share significantly.”

Hoteliers currently pay fees of 15 to 20 percent per revenue to OTAs like Expedia, according to Kopelman.

To get around Expedia’s high fees, Hyatt and other hotels are now expanding their loyalty programs to offer lower room rates when guests book directly through the hotel or value adds such as Club Lounges, Wi-Fi and upgrades.

World Of Hyatt, Hyatt's global Loyalty Program

World Of Hyatt, Hyatt’s global Loyalty Program

“Our focus remains on growing the value proposition for booking directly with Hyatt so we can build strong relationships with our guests and improve hotel profitability,” a Hyatt spokeswoman said in a statement.

Hyatt will launch a new marketing campaign aimed at promoting direct bookings and it will increase ownership fees by 7 percent to fund the initiative, according to the report.

“We partner with several hundred thousand hoteliers around the world and we stand by the value we deliver,” Expedia said in a statement.

In 2004, InterContinental Hotels Group followed through on its threat to leave the Expedia network for several years, but re-joined when the recession hit in the U.S and travel slumped.

We will be watching on with interest.

What do you think will happen? Do you think Hyatt will leave?

Source: New York Post.