CHOICE membership

Online accommodation booking scam?


#1

I have just watched a youtube clip by Dick Smith about Online Travel Agents and our own ACCC doing deals.


It really does expose how we are being conned.

Bunnings 'beat it by 10%' guarantee
#2

Hi bottville. Very interesting post. I have forwarded it to all my email address contacts.

Perhaps it would be good as a new topic under the Scams category.

As an aside, I actually meet Dick Smith whilst on a business trip to Sydney in 1977. I called to their head office and asked for another person named Smith to inquire regarding a couple of items I had paid for and urgently needed.

The receptionist mixed the names up and this little guy came bouncing down the corridor like he was on hippie beans, grabbed my hand, and introduced himself as Dick Smith.

I don’t know if he was a tad miffed at the mistake.


#3

Having recently booked an overseas.holiday, I can verify some of the points raised by Dick Smith applies in other countries as well.

An example being our bookings in Munich and Bucharest. The lowest price accommodation booking websites in fact were the not lowest price…the accommodation provider’s website (Munich) or direct contact with the accommodation (Bucharest) were cheaper.

I always check the prices at the hotel websites/send email to confirm rates for payments on arrival, and at these two locations our preferred accommodation was more expensive than the booking sites.

It does pay to contact the accommodation provider directly to see what the hest nightly rate is rather than trustting the lowest price booking sites.

What is concerning is if Dick is right and the ACCC has agreed that the accommodation provider can’t advertise a price lower than the lowest price booking sites, this is concerning as it stifles comoetition and forces, in effect one to use a booking site for a cheaper rate thus reducing the accommodation providers profitabiluty.

I suppose while some think digital disruption is a good thing, there are always (un)intended consequences.


#4

I love how he signs off at the end! Doesn’t he get his angry face on! and so should he :slight_smile:

“It’s what I call extreme greed capitalism - thankyou for watching!”

Thanks for the post!


#5

Without reference to the ACCC or determinations thereof, any business that would openly undercut its resellers/retailers will soon be left to fend for themselves.

If hotel A openly undercut expedia, booking, hotels, etc, etc the latter would either avoid listing hotel A or put it so far down nobody would notice it. They survive on booking commissions/referrals, sometimes with some ad revenue or add-ons like hire cars and travel insurance thrown in.

OTOH hotels, some airlines, and similar businesses are upfront that their web sites will provide the lowest available cost, and sometimes a call to a specific property will beat it and sometimes not, depending on the particular chain/business.

It is as much about ‘good business’ as anything. In these days most people do not have the time nor inclination to visit all the chain’s web sites, compare, and then ring a property or two to try negotiating. Therein lies some value added in the world of comparison sites. If nothing they can provide a pointer to where the best deal might be, to those so inclined.


#6

I avoid them where possible, have done for years since I found you can do a better deal, sometimes much better, for very little effort. The only exception in the last few years was a string of single night AirBnB a long way from home - a number of the places had their own sites and just pointed me to AirBnB - seemingly having no capacity to handle their own affairs in-house so to speak. I guess this might make sense - I’ve never run a BnB so the complexities of running a diary and putting eggs, milk and bread in the fridge might be lost on me :wink:

One thing that happens around my area a lot is the concept of ‘locals rates’ - particularly in off-peak but with many during peak as well. You don’t get these rates online. Even one or two of the multinationals will give locals a break - but again you need to call the desk not try it online.


#7

Irrespective of whether a business may affect their treatment by the online booking websites if they advertise a lower price on their own website, it is totally unacceptable if the ACCC is permitting such practices by the booking sites.

Many years ago, when the original Trade Practices Commission actually had a pair, they took Sony to task for refusing to supply a major Brisbane retailer due to them advertising Sony products at less than Sony’s Minimum Advertised Price (MAP).

The fine was $250,000 which was a new record at that time and it received widespread publicity. It also caused other businesses to seriously rethink how they treated their customers in regard to MAP’s.


#8

This is old news. Choice looked at this 23 March 2017: Choice article: Looking for a bargain rate?

I recall Wotif being sold to Expedia in 2014. There was much moaning over the loss of yet another Australian business to overseas interests.

The problem with duopolies (on other small oligopolies) is the lack of significant competition. As long as people like the convenience of the aggregators doing the work of finding accommodation for them, there won’t be a change, regardless of how much Dick Smith blusters about it.

Personally, when travelling within Australia in our vehicle I tend not to book ahead, relying instead on finding accommodation where we pull up at cheaper than the advertised rack rate. Often works. Sometimes we have to pay the internet advertised rate.

On the occasions when I do book ahead, I compare availability and prices on
the aggregators
the locale’s tourism website
Google search for accommodation in xxxx

I noticed that the availability of rooms for the same premises can vary dramatically between the aggregators. Also, beware of the lag. Sometimes all the rooms are taken, but they are still being advertised because the sites have not ‘refreshed’ their stock.

I find what I want, and then if possible contact the place directly, often managing to wangle some sort of deal, whether it’s a cheaper price, or an upgrade at the advertised price.

It has only happened once that the business referred me back to an aggregator to make the booking because they couldn’t take any bookings. Perhaps they thought I was checking on them?

(In the old days, I used to use the latest NRMA Accommodation Guide book which was out of date as soon as it was printed.)


#9

Not convinced. I regularly check prices on a popular accommodation site then ring to book. The prices are cheaper if you contact the place directly. Most recent experience was a month ago. What we have found however is a difference in the quality of the room. Booking directly often gets you a better room


#10

As a small accomodation provider ( www.galwijihomestead.com ), I can’t but agree with Dick.

The big guys are indeed foreign scammers, but only if the public is silly enough not contact the accommodation provider directly. I will always undercut the big guy, so that I don’t have to pay his outrageous commission.

BTW, in case you were wondering, AirBNB are no better and their commissions and their general lack of customer service definitely don’t favour the property owner.

One of their guests destroyed an 18-month old sofa bed (presumably by dancing on it) and AirBNB in their ‘generosity’ offered us $1196 to replace it, even though the quote was $2200…

Yay for Dick. Keep up the good work!


#11

Dick Smith covers the relevant points about the Online Travel Agents (OTA’s) extremely well. You have to admire the fact that OTA’s are, effectively, the largest sellers of hotel rooms in the world and make the most profits from those sales. They’ve achieved this without any outlay of money at all to purchase hotel properties. They are just using an existing system to come up with very profitable businesses and, in our free society, who can blame them.
What Dick didn’t expand on though was the most important point that allows the OTA’s to be so successful - the fact that Google, and other Search Engines, allow the OTA’s to hijack the names of individual hotels so that the search engine works against the individual property having a higher placement on their lists.
Search for any hotel by its name and you will find every OTA with the hotel’s own name on their entry’s heading, mostly before you reach the hotel’s own entry. Although Dick did mention this point I feel that the main culprit is the search engine. If the search engine didn’t allow the OTA’s to use the hotel’s own name in the heading of their entry the confusion that exists with customers that means that they use an OTA to book their room instead of going direct to the hotel wouldn’t exist.
However, as you would expect, it’s all down to profits with search engines such as Google and the OTA’s have to pay them for the higher placement and wording of their ads. Google do very well out of it. Don’t blame the OTA’s, they have just adapted to using the search engine’s own standards, i.e. making money.
What I don’t understand, though, is why the deliberate misappropriation of a hotel’s name in this way is not covered by something in our consumer protection legislation.
Well done Dick in bringing this up. As an hotel-owner I have had to join the OTA’s to survive and, consequently, had to increase my room-price tariffs to cover the commission costs. I don’t blame the OTA’s, though, I blame the search engines.


#12

Dick has a good point. Agree OTAs should not be applying pressure to a provider to prevent undercuting the OTA’s rates. Interestingly the last few times we have tested the call direct approach on the same day you are travelling the over the phone rate quoted as best rate was usually dearer than the OTA discount rate. We have done well though cold calling in popular locations out of season.

Another way to look at OTAs is to consider how we did things not that long ago. Less than 20years. We often used travel agents or the RACQ/NRMA travel services, or even had a preferred motel chain.

All of these took a percentage off the top. Some had special deals or preferred providers. Travel or booking agents such as those for corporates in particular had limited choices in each location.

None of it was transparent. Ringing around for the best deal was always a timed call so you could easily do the savings shopping around. The internet was still a baby then. Few smaller accomodation owners could fund an online presence. Those that did rarely published rates. You needed to make that all important contact to their sales team?

Now we have a much more transparent market place. You can comparison shop by price, location, standard, room outlook etc. I’d suggest this has only come about because of the online agregation and businesses such as Wotif. Consequently on average we probably pay less because we can make better choices.

If we took away the OTA’s would the web provide a competitive market place? How much time would it consume locating all the accommodation options? And could Google be trusted to be net nuetral with the search results returned?

All the OTA’s depend on maintaining market share, in selling the maximum number of room nights in all locations, and reliably representing each accommodation option to ensure repeat customers.

In return an accommodation provider may not need to spend up so big on marketing and has access to a very broad customer base. In respect of pressure from an OTA re a provider’s rates it is all relative. A provider sets their rates, but if they are not getting customers it might just be they are too old, out of fashion or in a poor location. It may be more useful to consider the reverse proposition. For peak periods where acommodation books out the OTA’s will be just as keen to see premium rates paid for the best properties, and every room booked.


#13

Greetings. We have been travelling around NZ for the past two weeks and some the motels have actually seen and shared Dicks online link. With one exception, by ringing direct we benefited on average between $13 and $25 per night.


#14

Another article regarding the bottom feeding grubs at the booking websites bleeding the accommodation providers dry.