Bed & Breakfast News Issue #46 Spring 2018 | Page 8

8 | Bed & Breakfast News | Summer 2017
Competition watchdog
investigation into OTA
practices to report soon
We wrote in our Summer 2017 issue (“Are OTAs abusing their power over B&Bs?”)
about our concerns about abuses of power by big online travel agents (OTAs) in their
dealings with B&Bs, and about Booking.com’s TV advert promoting free cancellation
at any time – we said “B&Bs are seeing cancellation rates soar as a result”.
At that time, we told you: “We have raised these issues with the EU and the UK
Competition and Markets Authority (CMA), and will keep members informed of our
progress”. We’d like to do so now – and there is some positive news.
Firstly though, a reminder of our argument -
why do people book in such numbers though
the giant OTAs?
OTAs use their unrivalled financial
firepower to buy the top places on google
searches (and they force B&Bs to let them
appear under the B&B’s own name in
google searches, so all clicks on the B&Bs
name yield commission to the OTA)
OTAs invent false discounts, to give the
impression that the room being sold has
been discounted by the OTA when it has
not
OTAs force (using ‘rate parity’ clauses)
B&Bs to build the commission demanded
by the OTA into the B&B’s room price,
even where the B&B sells directly to
its own customer off its own website
– allowing the OTAs to claim that they
“always have the best deals”
This price claim (enforced by the
restrictive practice of ‘rate parity’) and
the false discounts clearly work: surveys
show that 85% of consumers say they
book with an OTA “to get the best price”
Consumers believe they offer an unbiased
search of the full range of accommodation
according to their needs; in reality, what
might be more suitable accommodation
is not offered because the OTA cannot
take its cut, and the search results are
manipulated to make the OTA most
money, not to best meet the consumer’s
search requirements
They are easy to use – the OTAs have deep
pockets to develop compelling and user-
friendly websites and phone apps
They use their size and market power to
promote their brands extensively online,
on TV and in email marketing campaigns
to an extent that even the large hotel
groups like Hilton or IHG cannot now
compete with – and of course a B&B has
no chance
They promote the idea that consumers
can easily cancel what they book through
an OTA, whereas this might not be so
easy directly (resulting in vastly higher
cancellation rates on OTA bookings, and
hidden costs to B&Bs) even though in fact
cancellation fees may be due to your B&B