Dangerous online platforms

14.6 The danger of bookings websites

When bookings websites started in the 90s they provided a great tool for especially the lesser-known, not so well organized, and new businesses. Hotels without a (good) website, with a slow responding rate to reservations, or even not very good hotels took quick advantage of the online booking platforms. On the other hand, the better organized, popular hotels did not need the bookings websites, so many of them waited to join. However, the user-friendliness of booking websites made them so popular, that travelers started to avoid contacting their hotels directly. When popular hotels started to lose clients they felt the need to also sign up with the bookings websites.

These websites started to take advantage of their strong position and raised their fee from 5-10% to10-30% or sometimes even more! The higher fee you pay, the easier they will make it for their visitors/ your clients to find you. Besides the user fee bookings websites also obligate the hotels to certain conditions. One of them is that they don’t allow hotels to offer lower prices to their direct customers. A lesser-known condition is that they reserve themselves the right to continue using your name on their website, even if you resign from their services. It can happen that if you want to stop working with a booking platform, they maintain your name on their website. Behind your name, they will simply write: “Unavailable”. So many travelers looking for a room will automatically skip your hotel. Unfortunately, it is tough not to work with the booking website, as they continue to dominate the search engines on the internet.

The commissions that hotels pay to bookings websites potentially result in less profit and therefore less tax income for the community. On the other hand you can argue that the hotel would have fewer clients and income if they didn’t work with a bookings website. If bookings sites only charged a small fee for their services I personally believe this would be a fair business. But it is the height of the fees, the extra restrictions, and the benefits for hotels who pay more to be listed higher that make that these sites potentially damage local businesses and even the local economy.

The biggest danger of bookings websites
An extensive study from Josh Bivens shows the economic costs and benefits of Airbnb, arguable the most controversial booking website. Overall this study shows that in the end, Airbnb does more damage than good to local communities. Their biggest negative influences are rising prices of accommodation for the residents, loss of jobs, and a decrease in the quality of the jobs. Most Airbnb’s, especially in developing countries can avoid many of the investment and daily running costs that local hotels have. This gives them a false advantage over the local hotels. When those hotels can’t compete with the prices from Airbnb’s anymore, they have to close their doors. The maids and cleaners who lose their jobs at hotels might find new jobs with the cleaning companies that (especially) clean Airbnb’s, but those companies often pay them less and don’t provide a work guarantee.

Google and Amazon might soon become the biggest online tour operators. They are planning a basket with travel products like no-one else does, yet. This will make it easier for clients to book all-inclusive tours online, including flights, hotel rooms, transfers, excursions, and even meals in restaurants. The problem when all of these services can be booked online with major corporations is that less profit will make it into the local economy. In return, this will make tourism less sustainable.

Local and international governments are also beoming aware of the looming danger of bookings websites. To improve their sustainability, they’re starting to put more restrictions on the negative business policies of Online Travel Agents or OTA’s. The Daily Sabah published on October 18, 2019, the following article about the decision from a Turkish Court. According to the Turkish court, the defendant (Booking.com) was engaged in travel agency activity, although they didn’t pay taxes and did not obtain the necessary permits to open an office. The court noted that the defendant operated by opening strategically located “digital and fixed offices,” and in doing so, they avoided administrative-legal controls and therefore they did not comply with the business conditions stipulated. The court also ruled that the defendants contained provisions causing unfair competition in their contracts with hotels regarding “Wide Most-Favoured Nation (MFN),” “Price and Quota Parity,” “Minimum Allocation” and “Best Price Guarantee.”A Most-Favoured Nation clause (or ‘parity clause’) is part of an agreement between two parties where one party commits itself not to offer any better terms than those available to the counter party of the contract. Most European countries have already forbidden these Wide Most-Favoured Nation contracts due to the risk of false competition benefits. The Turkish court detected also that Booking featured advertisements on their website that caused unfair competition. The court ruled on the elimination of all the provisions of “Wide Most-Favoured Nation,” “Price and Quota Parity,” “Minimum Allocation” and “Best Price Guarantee” that were cited in contracts that the defendant signed with hotels, as well as on the removal of advertisements that caused unfair competition on Booking.com and all their online applications.

To improve the local economy, the life of local people, and your personal travel experience I recommend that travelers avoid using mass booking websites, especially Airbnb. Spending a little more time looking for your hotel of preference and book them directly will improve the local economy. But not only that, your direct booking will also allow you to ask for and receive a more personalized service. On top, your search gives you the chance to find hidden gems like the Izhcayluma Eco Lodge and other small locally owned hotels.