The British Hospitality Association (BHA) has hit out at online travel agents after a settlement by EU competition authorities which prevents hotels offering a cheaper rate on their own website. On April 22nd, the competition authorities in France, Italy and Sweden agreed to commitments offered by Booking.com following a series of investigations into their market dominance.
The commitments allow Booking.com to prohibit hotels from marketing and offering hotel rates at a discounted rate on their own websites. Jackie Grech, legal and policy director at BHA, said that the industry is “deeply concerned” that OTAs are stifling competition through high commissions, rate and service parity, and by manipulating search results and star ratings to attract customers to book with them
She said: “Hotels, especially small independents, must either sign-up to sell rooms through OTAs and fork out up to 35% of their total room costs or face invisibility online. “Customers and hotels alike will benefit from transparency and fairness. The authorities’ decision to uphold rate parity was not a meaningful solution and doesn’t return freedom to the market. “We all benefit from an open market, especially customers who will see lower prices and greater innovation if fairness is restored to the online hotel booking market.”
“While we acknowledge the effort of the competition agencies to consider this area, these commitments fall short of progress and will not benefit customers or hospitality businesses in a meaningful way. We all want the same thing: a competitive and innovative market for hospitality and tourism, these commitments missed the mark in aiding that goal.” Primary OTAs, such as Expedia and Booking.com, now have the funding to purchase key word searches, meaning that when customers search for a hotel by characteristics or by the hotel name, the top search isn’t the hotel itself but the online booking agent.
As a result, a growing majority of customers are driven to book through the online agent’s sites rather than through the hotel’s own website. The BHA said that as a consequence of this need for hotels to use online travel agents, hotels are “bullied” into accepting expensive conditions, many of which are also expensive to the customer.
The BHA added that OTAs have the power to impose high commissions, sometimes in the 35% range, adding that hotels are not allowed to offer the room to customers who book directly at a lower rate. It says the result is higher prices and less option to negotiate better deals with customers.