If you’ve searched for a hotel online recently, you’ve almost certainly encountered an online travel agency (OTA) like Expedia, Priceline, or Trivago. While you were scrolling through multiple OTA websites, how was your experience? Did you feel pressured to book right now? Did you feel a little overwhelmed by the urgent messages tagged on every hotel listing? If you did, you’re not alone.
In fact, organizations like the Competition and Markets Authority (CMA) are putting pressure on OTAs for potentially breaking consumer protection laws in the United Kingdom. The CMA’s concerns center on issues like pressure selling, misleading discount claims, poorly optimized search rankings, and hidden charges.
With the consumer’s best interest in mind, the CMA launched an enforcement action against a number of OTA booking sites, including Expedia, Booking.com, Agoda, Hotels.com, ebookers, and Trivago back in December 2018.
As a company committed to making your hotel search experience as straightforward and transparent as possible, we were obviously thrilled by these developments in the U.K. In response, we took an in-depth look at these shady marketing practices being investigated by the CMA. Here’s what’s going on…
Skewed Search Rankings
Have you ever wondered how sites like OTAs sort their search results? Maybe you assumed it was by price or by rating or by proximity to city center (which is what we do.) Unfortunately, OTAs aren’t nearly as wholesome as that. Due to algorithm ranking systems, you’re actually being shown their top picks first by default. These “top picks” are based on which hotels have the best ratings but also how much that hotel pays the OTA in commission fees. OTAs are banking on you not scrolling too far down the page before selecting a hotel, and they make more money that way by listing their higher commissioned hotels first.
We’ve all seen them: those pop-ups or flags that say, “only three rooms left” or “eight people are looking at this room right now.” These examples of false urgency messaging have been carefully designed to pressure you into booking right away even if the information isn’t completely true. The hotel property may actually have plenty of rooms available but have only commissioned a few for that site to sell. These tactics may prevent you from finding the best room, which can be a violation of consumer protection laws.
Confusing execution of “discounts” or “deals”, especially those that mislead consumers, can be a shady way of doing business. OTAs have been known to compare prices for standard rooms to luxury suites and calling it a “deal” or comparing a lower weekday rate with a higher weekend rate and flaunting it as a “discount.”
OTA customers have also reported feeling cheated with hidden taxes and fees which sometimes don’t get disclosed until right before you click “complete booking.” Customers find this infuriating because they feel like the OTA has left out a crucial piece of information from the hotel search and compare experience.
When Will This All be Enforced?
In February of 2019 after a long investigation, a press release published from the Competition and Markets Authority stated that all companies under investigation by the CMA have collaborated with investigators and voluntarily agreed to improve these practices by September 2019.
- OTAs will have to make it clear to searchers when commission has an impact on search result rankings.
- OTA sites must also stop using pressure selling tactics.
- They must also only display discounts that are truly available at that time and that are relevant to your search criteria.
- The last stipulation is that OTAs must display the total amount for a hotel room (including taxes and fees) up front in the headline price.
Is There Hope for Change in the United States?
Although things aren’t moving as fast here as they are in the U.K., we are making strides in increasing the transparency of OTAs and shedding light on their poor marketing tactics.
The American Hotel and Lodging Association (AHLA) has created the Stop Online Booking Scams Act, a bill that would protect consumers by increasing the transparency and security of the online booking process. Research is also being done surrounding OTA malpractices. A report from professor Benjamin Edelman of the Harvard Business School called “Impact of OTA Bias and Consolidation on Consumers” investigates the rise of OTA search bias. It explains how the consolidation in the market (with Expedia and Booking.com now owning 94% of the OTA market) is a problem.
We at Roomkey also want to bring more transparency to the hotel booking industry…so much so that our entire website was designed to be a safe zone. We think the process of booking a hotel should be straightforward and honest. You should be able to search for a great hotel that fits your needs for a reasonable price, no questions asked.
We’re here to make that happen. When you search with Roomkey, we show you all the information you need to make a booking decision you’ll feel good about—without the gimmicks or pushy messaging. Each hotel is listed with both the base rate as well as the final rate after taxes and fees. Then, when you find a hotel you like, we’ll take you directly to your chosen hotel’s website to secure your room and rate. Simple as that. No tricks. Just travel.
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