Net closing in on hotel booking sites

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Booking a hotel online has never been so easy, with countless choices literally just a few clicks away. At the same time though, the digital landscape that we nimbly navigate through has become something of a minefield. As reported by the BBC and others last week, the Competition and Markets Authority (CMA), following an investigation that started last October, took aim at as of yet unnamed Online Travel Agents (OTAs). Andrea Coscelli, chief executive of the CMA, noted that “booking sites can make it so much easier to choose your holiday, but only if people are able to trust them“.  Concerns regarding OTA practices are nothing new however. Last July, David Weston of the UK Bed and Breakfast Association pulled no punches in this Travel Weekly article – it seems the CMA duly listened to the concerns raised.

The opportunity therefore to share views on the issue via BBC Radio Kent (from 1hr 36 if you’d like to listen) was a welcome one. It’s easy to assume that, as well as having an ingrained desire to secure a good deal, consumers are savvy to the dubious practices the CMA identify, such as pressurised selling or not revealing additional charges during the booking process.  I suggested that consumers resist messages such as “16 people also looking at this property” or “only 1 room left at this price”, and take a few minutes to see if a similar rate is available via the accommodation provider’s website. Speaking as a former manager of hotels, I know first-hand that OTA bookings, especially for hotels in pursuit of the ‘perfect sell’ (i.e. 100% occupancy with high average room rate), are often the first to be identified as potential ‘walks’ (you can guess what that means!).

Here at MMU, we see it as our responsibility to ensure our tourism students enter industry fully aware of the scale, value and impact of travel intermediaries. In a recent lecture, I shared for example that the single largest OTA (Booking Holdings, whose key brands are Booking.com and Kayak.com) has a market capitalisation value of around $100bn. That’s actually greater than the value of the five largest international hotel groups combined, despite them having around four million rooms under ownership or management. According to a PhocusWright study, in the UK online travel market, a third of all bookings in 2017 would have been via an OTA (versus supplier-direct). In subsequent seminars, we discussed how OTA bookings might impact upon accommodation businesses, and indeed the communities they operate within. Students rightly identified that OTAs work well for some, but if they rely too heavily on OTAs (paying up to 25% commission per room night), then budgets could easily unravel, potentially affecting product quality, as well as sustainability aspects such as employment conditions, responsible purchasing, and so on.

With tourism impacts more in the spotlight than ever, practically all multinational tourism organisations have significant focus on sustainability. Booking Holdings has a dedicated website, Booking Cares, which states the company’s aim as being “…to make a positive, lasting impression on the global tourism industry”. Expedia (the third largest OTA after the Chinese organisation C-Trip) offers Expedia Cares.  CEO Mark Okerstrom states that “Expedia Cares isn’t a charity. It’s our responsibility as a global travel company”. Both websites outline strategies and programmes that are impressive in terms of scope and innovation. They are not the only organisations however whose sustainability initiatives are viewed with some cynicism, especially when the core product hits the headlines for the wrong reasons.

The CMA have now instructed booking sites to review their selling practices and respond within the next few months. In the meantime, when you next book accommodation online, consider your options carefully, and think about the potential impacts your decision could have on the industry and its breadth of stakeholders, as well as your own pocket.

Photo by KEEM IBARRA on Unsplash