Boutique Hotel Explains What’s Wrong With Online Booking Status

Industry consolidation. Online travel agencies play games with discounts. And a proliferation of dodgy booking sites posing as official hotel websites.

From the perspective of managers of independent groups, boutiques or small hotels, some of the recent trends in online distribution have been vexing to say the least.

Skift has engaged in an ongoing dialogue in recent weeks with one of these hoteliers about developments in the travel industry. Referring to distribution partners of online travel agencies who do not respect tariff agreements, the hotelier, who declined to be identified, says: “We have no control over parity because it is like the Wild West there with online travel agencies charging what they want with no consideration given the rate we set for our own hotel.”

While this hotelier’s concerns are specific, they reflect persistent concerns we’ve heard from other properties with regards to managing relationships with online vendors. We explain below.

Rate games

In the scheme of things, hoteliers enter into contracts with online travel agencies to sell their rooms at fixed rates and an established commission. In the first quarter of 2015, however, an Expedia official admitted that the company cut margins at times when selling rooms and presumably lowered rates to create loyalty programs and share.

“Every time you call Expedia to complain about the (discount) practice, they claim to know nothing about it, and it must be one of their rogue affiliates,” the hotelier told Skift. “They would never do anything like that to us, and they will contact them and try to help you close that discount code.”

“It’s one thing to sell what we give them to sell at the agreed commission, but it’s quite another to claim that you can’t do business with less than a certain percentage of margin because of your marketing costs and then using that crazy percentage to pay for ads to poach travelers Googling us by name and cutting the margin to sell them cheaper rooms It’s like selling your house for $1 million and that an agent stands outside the door of your open house and tells people who walk through the door not to buy from you. Buy from him for 3% because he will split the 6% commission with the seller. Would that be suitable for a landlord? Of course not.”

Exorbitant commissions

Expressing disappointment with the US Justice Department’s antitrust division that paved the way for the Orbitz-Expedia deal, the American Hotel & Lodging Association said independent hoteliers would now face the risk of price increases. two-digit commissions.

The hotelier we spoke to compared rising commissions from online travel agencies to usury.

“The fear is, of course, that as Expedia has fewer and fewer competitors and becomes too big to say no to certain hotels, then what’s stopping them from going into hotels and saying they increase the margin by another?5% or 10% or more?Just as it is illegal to charge 50% interest on a loan, it should be illegal to charge too much commission, and I think there should be have a regulation capping them at 15%, maybe 20% maximum, but that must be regulated.

“When an OTA takes 32%, it really earns more than the hotel, which bears the actual cost of the customer’s accommodation,” the hotelier said. “And don’t say they need the money to advertise our rooms because a lot of their spending is actually advertising to divert the customer who is already looking to book us and looking for us through our name.”

Not many choices for dealing with Expedia

Online travel agencies are indeed powerful marketing entities for the hospitality industry and online travel agency commission levels tend to drop in many cases. But if Expedia ultimately decides to increase commissions, can’t independent hotels just decide to give more business to or anyone else charging lower commissions?

“I wish that were true, but it’s not because the selling price to the customer would be the same as under the contractual parity requirement; they would just keep more money and we would pay less for the same product, the same service,” said the hotelier.

“The only way to get more on or directly is to not provide inventory to Expedia, but here’s the catch,” the hotelier said. “When people look for your hotel on Expedia, when you don’t give them inventory, they’ll tell them there’s no availability, and here are all the other hotels you can choose from, even if they know full well that you have availability and they can access the 10% global distribution system rates, which is how we worked with them before. error. Again, this should be illegal.

Fraudulent hotel booking sites posing as branded sites

In the middle of our conversation, a traveler contacted the hotel’s customer support team saying that he thought he had booked a room directly on the hotel’s website, but in fact had Booked a room on an Expedia-affiliated site with a URL resembling the hotel’s website address.

“Using your brand name in ad titles and URLs is absolutely designed to be misleading,” the hotelier said. “I can’t tell you how many times people tell us they thought they booked using our website, but in fact they booked on an OTA.”

Sometimes it would take a particularly savvy traveler to decipher the difference, and the American Hotel & Lodging Association has lobbied the US Federal Trade Commission to suggest possible solutions to crack down on trademark-infringing affiliate websites.

Metasearch disappointment

The hotelier is not only angry at “partner” online travel agencies, but metasearch sites (a few of which are owned by online travel agencies) are also criticized for “false advertising”.

“Metasearch sites all claim to show ‘all fares’ which is, again, designed to be misleading since they should really say they only show fares for everyone who pays them to show the rates. Why is this false advertising legal? For my hotels, meta does not show direct hotel rates because pay per click is too expensive for us. We have tried this PPC model with Trivago, TripAdvisor and Google Hotel Finder etc. and it is a proposition that is losing us money, either because the conversion rate was too low or because the clicks were too high.

Is there strength in unity?

Hotels have been talking for years about reducing their reliance on online distribution from travel agencies, and the big chains, to some extent, have succeeded in doing so.

But joint action by the hotel industry would be difficult.

“I can’t even say out loud to my fellow hoteliers, for example, at an HSMAI event, ‘Let’s be smart and stop accepting being treated this way by OTAs’ because it’s illegal. thanks to antitrust laws,” the hotelier said.

“They [the online travel agencies] have deep pockets and a lot of lawyers and small hotels don’t so if we can’t use our associations to defend ourselves there isn’t much we can do to defend ourselves that won’t end up costing us more than fools commission.”

Independent hoteliers are indeed exploring alternatives to large online travel agencies, including finding ways to encourage more direct bookings, but it sometimes seems like an uphill and uphill battle.

Crazy commissions always rule the day.

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