Online booking agents have been behaving like kings – it’s time to topple them
As the nation begins to plan summer breaks, following a tortuous two pandemic-fuelled years, a collective sigh of relief should be heard from Somerset to Stoke. But there’s little relief to be had when a broken system is driving a false market of competition.
For years, the travel industry network titans have been able to control the price of holidays with artificial competition – pitting customers between each other – making it seem like there’s either high demand or genuine bargains to be had.
Some of the online booking agents can be accused of behaving more like monopolies; setting an ever-spiralling cost which leaves less change in the pocket for hoteliers and holiday makers alike. There are no winners in this system.
These monopolies place focus on growing their cut when booking a stay rather than on user experience and achieving the best service and price for their customers.
Artificial competition between booking sites provides customers with a false sense that they are making a saving on their holiday. Instead at the same time, hotels are landed with growing commissions from the big booking platforms which eat away at their bottom-line causing price rises across the board both for consumers and suppliers.
The established big-brand online travel agents are able to push this dominance by spending billions a year bidding against each other on search engines – and it’s all perfectly legal to do.
With soaring costs, they charge hotels commission rates that on average range from 15 per cent to 25 per cent on every booking creating a price disparity in which both customers and suppliers lose out when booking a hotel room. In real terms, that’s less sunset holiday cocktails and less paella in the sun. In other words, less of what we love about holidays.
Furthermore, hotels are often locked into rate parity agreements with the big online booking sites, meaning that they cannot advertise a lower rate to any customers.
This creates a problem: rooms lay dormant, when they could have been filled by guests to shore up the hotel’s business. With 30 to 40 per cent of revenue derived from additional sales once guests have stayed, such as food and drink and parking, hotels can’t afford to have non-occupied spaces.
But look yonder and Big Tech may just turn the tide on this lose-lose situation. By digitally connecting travel suppliers to the booking public consumers, therefore cutting out the expensive intermediary, the end could be nigh for the price fixers.
Playing a game of chess with the giants won’t be easy, as they will have their next 6 moves planned out in meticulous detail. But at some point customers will get tired of being pawns in their game, and you can bet your bottom dollar, the travel titans will be toppled.