Hilton, Expedia Form Web Partnership

Hilton Hotels Corp., striking back at discount hotel Internet sites, said Monday that it agreed to give online travel service Expedia Inc. access to its central reservation system.

The two-year partnership is part of a strategy aimed at eliminating deeply discounted Hilton hotel rooms on the Internet.

In return, Expedia has pledged not to undercut Hilton’s prices and agreed to significantly cut its commissions to the hotel operator.

In 2002, net and gross reservations booked through its company-owned Web sites rose 95%, Hilton said. Online bookings account for about 10% of its total bookings.

As for its six company-run Web sites, Hilton said it would streamline online ordering.

Hilton, headquartered in Beverly Hills, also said it planned to stop awarding points in its loyalty program to guests who don’t book directly with Hilton or its chains, such as Doubletree, Embassy Suites and Hampton Inn.

A small but increasing share of hotel rooms are being booked through online travel agents and discounters, including Hotels.com, Expedia, Priceline.com and regional tourism sites such as LosAngeles.com.

About 10% of the 80 million room-nights Hilton sold last year were via the Internet, the company said.

Of those, about three-quarters were sold directly by Hilton, double the rate in 2001.

Expedia, based in Bellevue, Wash., had been charging a 28% commission for each sale of a hotel room -- a rate it is cutting to 18% in the deal with Hilton, according to a report in the Wall Street Journal.

Shares of Hilton closed Monday at $12.83, up 39 cents, on the New York Stock Exchange. Expedia shares finished the day at $52.23, up 23 cents, on the Nasdaq Stock Market.