The Downside Of Accommodation Booking Websites

November 14, 2018

Image: ABC News

Did you know that everytime you use online accommodation websites such as Booking.com, Trivago and Wotif, wealthy US businessmen grow their bank balances without lifting a finger?.

Entrepreneur Dick Smith certainly does, and recently took to social media to launch a powerful attack on American multinational companies involved in the process, saying they were “leeching” millions from family-owned hotel and motel businesses in Australia, particularly in the regions.

Dick, who launched the “Book Direct” campaign in Adelaide earlier this year said he thought “if you booked through one of these sites like Trivago maybe five or 10 per cent was going to the Northern Hemisphere, but I found it’s up to 30 per cent… it’s wrong, it should be stopped,” he said.

“It’s a giant con. It’s sucking like leeches hundreds of millions of dollars out of Australian family businesses and sending it to these two sites,” Dick told Sydney shock jock Ray Hadley.

And now a group of Australian hotel and motel owners have openly joined the fight urging consumers to book hotels directly with businesses instead of using accommodation comparison websites.

Business owners who have spoken out said websites like Trivago, Wotif, Hotels.com and Agoda charged large commission fees, were difficult to deal with and could dominate online search rankings.

They also said while there were several booking websites, most of them were owned by two companies, Booking Holdings and the Expedia Group.

One Bendigo motel owner said even questioning policies of the websites could result in losses.

“That can be a very dangerous thing to do, to identify your property and speak out against any of these sites because they have nasty little ways of dealing with agitators… just to drop us down their list and put us on the third page or fourth page of their site,” he was quoted as saying.

“That’s when you might have to do things like pay a higher commission [or] offer discounts through their site that you don’t want to do.

“That’s one of the things that some of the sites do — they say if you offer discounts through our site, we’ll put you further up the page.

“It’s very frustrating, I’ve been in the motel industry for 15 years and I was in a caravan park for eight years prior to that and the whole thing has changed so much, especially in the last five years — it’s made it very difficult for family businesses to operate.”

In a statement, the Australian Competition and Consumer Commission (ACCC) said it was investigating issues in the online travel booking industry, including parity clauses — which generally require accommodation providers to offer their best price and availability to online travel sites — to see if further action was warranted to improve competition and business practices.

“The ACCC also this year launched action against Trivago, alleging it ran TV advertisements presenting its website as an impartial and objective price comparison service that would help consumers identify the cheapest prices for hotel rooms when, in fact, Trivago’s website prioritised advertisers who were willing to pay the highest cost per click fee to Trivago,” it said.

Accommodation Association of Australia chief executive Richard Munro told the ABC that many Australians were not aware their money was going overseas.

The industry group will this month give evidence to a Senate inquiry examining new multinational tax evasion laws.

“What people are educated on the TV every night is Expedia and Booking et ceterais to go through them, but they don’t realise at least 15 percent of that goes directly offshore, untaxed, to another country,” Mr Munro said.

“Our message is book direct because you’ll find that you’ll get a better deal and you’re supporting Australian business.”

He said there was a notable change when Australian trip booking website Wotif was taken over by US-based Expedia and said it was impacting local jobs and reinvestment.

“The commission rates are so high, it actually compresses profits, so then there’s less profit and the effect is that immediately you have to reduce costs,” he said.

“The biggest cost in our industry is labour, so it’s a job killer.

“There was a big change when Wotif, which was an Australian company, got swallowed up by Expedia, which is a multinational.”

CHOICE spokeswoman Erin Turner told the ABC that third-party travel booking websites were “a great place to start researching price and options for your next trip” where consumers could see what options were available in the market.

“People are using comparison sites to find a great deal or compare lots of options,” she said.

However, Ms Turner said the a lack of diversity in ownership was impacting competition.

“The problem is that this sense of competition can be an illusion,” she said.

“For example, when it comes to hotel booking sites and comparisons, most of the sites are owned by just two companies and we’re starting to see similar prices across most websites.”

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