Hoteliers warn of ‘rogue’ sites tricking guests

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The long-standing friction between hoteliers and OTAs was kicked up a notch last week as the trade associations representing each of those groups engaged in a war of words and data over “rogue” OTA websites.

The hallmark of such sites, according to the American Hotel & Lodging Association (AH&LA), is that they trick consumers into believing that they are booking directly on a hotel’s website. The Travel Technology Association (Travel Tech), the OTAs’ trade group, meanwhile, defended the trustworthiness of the distribution channel it represents.

The AH&LA said that U.S. consumers book as many as 15 million hotel rooms each year, totaling more than $1.3 billion in revenue, through “rogue” OTAs. And, citing a study compiled for it by GfK Custom Research, the trade group said such bookings often resulted in corrupted, inaccurate or nonexistent bookings.

The GfK survey, which polled a sample of some 1,000 U.S. adults in July, found that about one in 17 people said they had booked through an OTA that they had thought was a direct channel only to discover it was not.

Additionally, about a third of those surveyed who had booked through any OTA reported experiencing “inconveniences” ranging from getting a room that was different from what they had expected to not getting rewards points to not being informed of added fees.

In all, about 3% of those surveyed said their OTA-booked reservations had either been lost or canceled.

The sites the AH&LA termed “rogue” are in fact often affiliates of OTA giants Expedia and Priceline Group. But the trade group said that unlike the typical practices of their better-known parent companies, these sites often intentionally mislead prospective guests into thinking they’re booking direct by employing hotel logos, pictures and other visual cues.

Expedia is the most popular OTA among U.S. consumers, and it alone has about 7,500 affiliates.

Americans will book about $53 billion in hotel reservations online this year, according to Phocuswright. Combining that estimate with the AH&LA’s numbers, it can be inferred that about 2.5% of those bookings may have been clouded by guest confusion over whether the channel was an OTA or direct hotel site.

“These findings clearly show that online hotel booking scams have eroded consumer confidence among third-party vendors,” Katherine Lugar, president and CEO of the AH&LA, said in last week’s statement. “Consumers deserve transparency in knowing who they are booking with. That is why we have been actively working with state and national government agencies, including the FTC, as well as consumer advocacy groups, to ensure that consumers are protected and can feel comfortable in the booking process. It’s always safest to book directly with the hotel.”

A random Google search last week for hotels in New York, Los Angeles and Kansas City generated listings predominantly from OTAs such as Expedia and Priceline Group as well as from their better-known divisions such as Hotels.com and Booking.com. However, they also produced results from lesser-known booking entities Reservation-Desk.com and HotelsCombined.com.

Reservation-Desk.com is part of the TravelPass Group, while HotelsCombined.com says it partners with both Expedia and Priceline’s Booking.com division.

Travel Tech, citing an online poll of more than 2,000 U.S. adults it conducted using SurveyMonkey last week, countered that almost 70% of those sampled said they viewed booking through OTAs as “convenient and safe.” Of those polled, 43% booked hotel rooms through OTAs, while 40% booked directly through hotel websites.

“It is clear the American public not only relies on the convenience of shopping across multiple travel brands in a single place, but they continue to trust online travel companies with their vacation and business travel itineraries,” Travel Tech President Steve Shur said in Monday’s statement.

Tracking what percentage of OTA hotel-room bookings are problematic and how that figure compares with the percentage of problem bookings made on hotel-direct websites is difficult because there have been no known impartial studies conducted on the subject.

Henry Harteveldt, travel industry analyst with Atmosphere Research Group, estimated that a decade ago, as many as 10% of OTA hotel bookings might have been inaccurate, but he said that percentage has likely dropped substantially as OTA connectivity with hotels has improved.

What’s more, deciding what constitutes an inaccurate booking is challenging, he said, because a hotel’s definition of a “superior” or “deluxe” accommodation can differ, sometimes substantially, from that of the guest, and there are no standard guidelines.

Regardless, hotel and OTA representatives continue to battle for distribution share as hoteliers look to cut costs by bringing more online bookings in-house, while OTAs look to maintain distribution share while battling each other.

In a report last November, Phocuswright predicted that between 2012 and 2016, OTAs will have gained two percentage points in their share of hotel online bookings, bringing their collective share to 48%, compared with 52% for hoteliers’ own sites.

In August, the AH&LA publicly opposed Expedia’s pending $1.34 billion acquisition of smaller competitor Orbitz Worldwide, arguing that the deal would reduce competition. Among the AH&LA’s arguments was that both Expedia and Orbitz had affiliate relationships with “thousands of smaller websites,” many of which mislead prospective guests into thinking they’re booking directly through hoteliers.

Expedia completed its Orbitz acquisition last month after the agreement was approved by the Justice Department. The AH&LA said it was “disappointed” by the Justice Department’s decision.

Expedia, Orbitz and Priceline control more than 95% of U.S. consumers’ travel bookings through OTAs.

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