NB: This is a guest article by Markus Luthe, CEO of the German Hotel Association.
A declaration of war such as that of John Guscic, managing director of Australian online booking platform Webjet, cannot be any clearer:
"The supplier does not have a monopoly on price. We price our hotels as we see fit. We sell at a price I determine."
Accordingly the headline on Travel Trends for this pithy saying is: "Webjet says it will dictate hotel pricing, not suppliers."
One cannot point out the hotel businesses’ own weaknesses regarding distribution more clearly than that.
If you're thinking you do not really give a damn about some hotel room leftovers chute Down Under, then go ahead and type in your city name on Webjet.
On the web the competition is just a quick click away. By no means is this about some single provider, running wild in the remote global network. The affiliate system of the major hotel booking portals is the real challenge.
And it's a controversial situation, making many hoteliers extremely angry.
All major online travel agents provide such affiliate programs. They enable destinations, tour operators, transportation companies, review sites, travel communities and many more to offer a hotel booking tool with the look and feel of their own website.
Some enrich their hotel rates and availability with the affiliate offer. Up to half of the commissions earned from the hotels by the booking portals are handed over to its affiliates.
Their number is just as vast as their business models are heterogeneous. HRS alone has over 6,000 affiliates and Booking.com has over 5,000 of such distribution partners.
As a consequence, the hotel hardly has any knowledge, let alone control, over their online distribution channels.
If, for example, a hotel found out that the OTA Z aggressively applied Google AdWords to its hotel name and also garnished these with SEO-optimized exotic top level domains, it can still hardly prevent it to be - although unwanted - bookable through this portal.
Even if the hotel should succeed in having an OTA contractor A remove it from OTA Z, the OTA's next affiliate agreement with OTA partner B comes into effect and the hotel remains exposed to the unfair advertising practices of the Z.
A hotel cannot stay away from all online booking portals for this reason.
But usually this market adjustment already fails because the hotel does not even become aware of the affiliate’s operations, let alone take sufficient influence to selectively withdraw its commodity.
For this reason, during the general assembly of our European umbrella organization HOTREC a few weeks back we advocated that the previous "20 vertices of fair conduct of hotel booking portals" are expanded with following element:
The hotel should be notified of all of its contractors across all sales channels and potential affiliates and the hotel should be given the opportunity to make adjustments either at the time of conclusion of contract or afterwards.
This affront to the market comes not only from the sphere of the affiliates - the state of the problem is more complex.
It happens on a recurrent basis that tour operator rates, without having been bundled into a complete travel package, are freely available on the Internet as "rooms only" prices.
By way of these interfaces and via metasearch engines, the internet rate structure is leading to an economically absurd result.
Here, too, hoteliers must make sure they secure at least the same contractual rights to intervene as they do with their affiliates.
In the German Hotel Association’s updated terms and conditions for cooperation with travel agencies, we therefore propose the following clause:
"The agreed prices are valid only in conjunction with other services, offered to the end-customer in a bundled service package. They may not be offered to the end-customer or third parties as a single price for a simple overnight stay (non-packages) through distribution channels (especially online). The tour operator is obliged to subject all his other partners and mediators to this clause as well."
We will see if it works...
NB: This is a guest article by Markus Luthe, CEO of the German Hotel Association.
NB2:Pool image via Shutterstock.