Last week the “Today” show aired a segment about how to save money when booking a spring break getaway. The secret? Book through Costco Travel, a membership club that charges $55 per year to consumers for the privilege of shopping for commodities at a Costco warehouse store or buying travel products online at the Costco Travel website.
The reporter booked a Fairmont Inn stay in Sonoma Valley, California, and an all-inclusive resort in Cancun, Mexico, through Costco. Then he researched identical bookings on Fairmont’s website, Expedia.com and Booking.com. Unsurprisingly, Costco’s prices were significantly lower than the hotel website and the online travel agencies.
Enter the American Society of Travel Advisors. (Disclosure: I was an editor of ASTA Agency Management magazine 1989-93.) ASTA’s mission is to defend travel agents and to try and boost the recognition, value and professionalism of travel sellers. So it was a little surprising to find the association issuing a statement on its website defending OTAs against discount pricing, since OTAs compete with travel advisors. But ASTA explained why:
Note that ASTA does not provide any evidence to support the potentially serious allegation that Costco had paid for the segment. Indeed, there was no indication that the piece was underwritten by Costco, but when you’re “fighting the good fight” on the side of beleaguered travel agents, I suppose you can justify taking some rhetorical liberties.
To me the “Today” piece looked like any save-you-money TV segment. And it’s completely reasonable to suppose it was the result of a Costco PR pitch. I’ve been involved in enough similar pieces to know how they work. If it was a paid insertion, I’m pretty confident that “Today” would have offered a disclaimer of some sort, rather than risk the ire of the Federal Trade Commission — regardless of what ASTA alleges.
If it was a Costco PR placement, it was smart and effective. And the reporter did, in an attempt to show balance, give a Fairmont representative an opportunity to explain the price difference and claimed to have reached out to the online travel agencies, which didn’t respond.
I found an article from December on Investopedia.com that explains how Costco’s prices could be so much lower than the hotel or OTAs. Basically, Costco considers travel to be a low-margin commodity and makes very little profit selling it. Costco maintains low prices by making little to no profit selling brand name products while boosting profit margins on its own Kirkland Signature–branded products.
If ASTA had done a little research, it would have seen it is easy to account for the cost differential between what hotels and the OTAs charge and what Costco charges.
But ASTA isn’t concerned over competition between Costco and the OTAs. The association saw an opportunity to jump on a story that could be made to support its mission of preventing travel agents being bypassed. The association’s PR ploy yielded articles in Travel Weekly and Travel Agent magazines, both of which are read by travel agents — ASTA members — thereby demonstrating how ASTA was valiantly defending travel agents against big-box retailers who undersell them.
In other words, while the “Today” segment was likely a pretty great piece of earned PR for Costco, ASTA’s response was a pretty effective use of the public relations dark arts, too.