The relationship between accommodation
owners and giant online travel agencies (OTAs) is one of the hottest topics in
our industry just now.
The big OTAs undoubtedly offer huge
benefits to hotels and B&Bs, helping us to fill our rooms by marketing them
globally on user-friendly apps and websites for a known commission rate,
payable only when a booking is taken.
However, this great boon has come at a
heavy cost – the dominance of especially the two biggest American OTAs who have
80% of that market, and the consequent reduced margins for accommodation owners
and loss of cashflow, soaring cancellation rates, and a compromised relationship
with their guests.
Profits have taken a big hit for accommodation
owners, employers and risk-takers as the online intermediaries grab an ever-larger
share of bookings (taking their 15-25% cut on those), and consequently prices
have been driven up for consumers, and the OTAs have been hugely enriched. The big
two OTAs are now worth much more than the biggest four global hotel groups
combined.
From the small accommodation owners’
perspective, this loss of control and profitability to the intermediaries has not
been the result of free and fair competition. It has been at least partly driven
by (a) some egregiously misleading marketing, (b) restrictive “rate parity”
clauses preventing discounting by owners to their direct bookers, and (c) the
dominance by the OTAs of internet search.
Back in July 2017, the B&B Association
filed five formal complaints with the UK competition regulator (CMA) covering
those three key areas. Three of our complaints – on fake “discounts”,
misleading availability statements and manipulated search rankings – were acted
on by the CMA on 6th February this year, when they banned a raft of“misleading” practices by OTAs.
Our first complaint to the CMA had been
about “rate parity” clauses, which we still want banned – and I wrote about
that issue in Travel Weekly recently (“Why OTA ‘rate parity’ clauses should bebanned”, Feb 13th).
That leaves our fifth complaint to the CMA
from 2017 (also still not addressed): against forced (non-optional contract
term) bidding by OTAs on hotel and B&B names with search engines.
This practice enables the OTAs to colonise
the top of search listings, even for searches of a B&B’s or hotel’s own
brand/name, without the owner’s express permission. It is typically bundled
with all the other T&Cs, so non-negotiable.
One of our members, Frank McCready,
referred to this as “brandjacking”. He says: “The considerable investment I
have made in a website that enables online realtime availability and booking is
totally wasted. I am now invisible in web searches- lucky to appear on page
ten!” His requests to the OTA to stop bidding on his name were refused,
and he was told by Google that only a spend of over £900 per month on
pay-per-click would counter the OTA taking top place on Google searches for his
B&B’s own name.
He has just launched a Government ePetition to make “highjacking” by OTAs of a B&B or hotel’s name on search engines illegal
We agree that a hotel or B&B should be
allowed to say to an OTA “yes, we’re happy to deal with you, happy to give you
our availability, happy to pay you commission on bookings you bring us, BUT we
don’t want you to undermine our own direct marketing by bidding on our own name
with search engines”. That would make competition freer and fairer.
The way to achieve that is for the CMA to
ban the OTAs from forcing their name-bidding terms on an accommodation
provider. That must not be a non-negotiable item bundled into the OTA’s
T&Cs on a “take it or leave it” basis as at present; it must be subject to
separate express agreement.
We see this ‘ask’ as a modest and reasonable
way of redressing the grotesque imbalance of power between global OTAs and tiny
family businesses, and making competition a little fairer. So join me in urging
the CMA to act.
CLICK here to read and sign Frank McReady's Petition
CLICK here to read and sign Frank McReady's Petition
