Consumers losing out due to sly practices by hotel booking portals: study

by | Feb 19, 2019 | News

A study by the Center for European Economic Research (ZEW) highlights dodgy hotel booking methods causing displeasure among both hoteliers and their guests

A new study has reiterated that several hoteliers and consumer advocates do not approve of the tricky methods used by large hotel booking portals.

The study, by the Center for European Economic Research (ZEW), found that hotels are often given inferior positions in search results for deploying business practices such as quoting cheaper prices on their own website.

“Not every positioning and recommendation on major booking portals such as Booking.com and Expedia is therefore in the interest of the users,” the study says.

Consumer advocates also agree.

“Ultimately, hoteliers are forced to put the cheapest offer on the pages of the booking portals,” said Felix Methmann, tourism expert at the Verbraucherzentrale Bundesverband.

“There’s no fair competition and that’s not good for consumers – only with the right kind of competition can we get cheap prices for our customers.”

Members of the hospitality industry have confirmed the findings of the study.

Markus Luthe, the chief executive of the IHA industry association, criticized the ranking lists of the booking portals as “intransparent and at least questionable from a legal point of view.”

“In the common interest of hoteliers and users, we urgently need more clarity, transparency and reliability,” he underlined.

Many hotels more expensive on booking portals

The results of the ZEW study indicate, according to Luthe, that portals optimize rankings so that they achieve maximum profit. However, they do not show the consumer the best search result for them.

“The guest should be clearly advised when the hotel placement is subject to criteria other than star rating, guest ratings, room rate or distance to a desired destination,” Luthe said.

Ranking positions significantly affect which hotels are booked on internet portals – and which are not.

The researchers evaluated search results on three prominent booking portals between July 2016 and January 2017 for 250 cities in different countries, including Booking.com, Expedia, and Kayak.

They compared the prices of the room offers from more than 18,000 hotels, and also found that every fourth offer on the hotel’s website was cheaper than a booking portal.

“It would be desirable for booking portals to better inform consumers about how they calculate their rankings, referred to as ‘recommended’ or ‘our top tips,’” said ZEW researcher and co-author of the study Reinhold Kesler.

“Consumers could then better decide to what extent they really want to follow the recommendations,” Kesler added.

Every fourth booking via internet portals

When asked for comment, Expedia said hotels that performed best on the sites were the ones that met customer expectations such as positive reviews and pricing.

Such hotels would be the most likely to be booked and thus moved upwards in the placement order. In addition, customers could use the settings to sort the search results according to their wishes; for example by price, number of stars or verified ratings.

Similarly, Booking.com commented: “The rankings were based on an automated algorithm built on customer feedback. Accommodations that were booked again and again showed that they were well received by customers.”

“Customers tend to not book high-priced accommodations,” it added in a statement.

According to data from the German Hotel Association (IHA), the market share of booking portals has grown in the past year.

One in four overnight stays in Germany (25.2 percent) was, according to recent figures, reserved via online portals in 2016.

This was dominated by Booking.com, the HRS Group and Expedia. Traditional booking methods such as telephone or fax lost importance.

The ZEW study was published before the United Kingdom’s consumer protection agency, the Competition and Markets Authority (CMA), took action to reform sales practices of online travel agents (OTAs) worldwide, as reported by TOPHOTELNEWS here.

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