The Stop Online Booking Scams Act – What This Means for Hotels
Protection – But For Whom?
Hoteliers are applauding the introduction on 27th September 2016 of new legislation entitled the ‘Stop Online Booking Scams Act’. As online bookings grow in popularity, so do scams and fraud. According to the American Hotel & Lodging Association (AHLA) as many as 6% of online reservations are made through fake hotel booking sites, enabling criminals to steal $1.3 billion annually.
It is interesting to note that, although the AHLA say the purpose of the Act is to protect the public, not everyone agrees. A spokesman for the Travel Technology Association (TTA), which includes reputable Online Travel Agents (OTAs), suggested it was an attempt to scare consumers into booking directly with the hotels.
Travel Technology Association (TTA), which includes reputable Online Travel Agents (OTAs), suggested it was an attempt to scare consumers into booking directly with the hotels.
So what is the background to the Act and what does it mean for hotels?
Vacations at Risk
Online bookings now account for 44% of reservations made in North America, with an average of 480 being made each hour according to the AHLA. Over 52% of these bookings are done via OTAs and not directly through a hotel website. Some of these OTAs are the well-known aggregators like Expedia and Priceline or their subsidiaries, such as Hotels.com and Booking.com. Others have no arrangements with hotels, which can lead to serious problems for hotels and consumers alike.
The type of scam identified in the preamble to the Act relates to websites that falsely claim to represent a hotel. Some mimic genuine websites so closely that consumers believe they are dealing directly with the hotel.
The first place many people go is Google. Top hotels and companies like Expedia and Priceline often pay for their ads to appear at the top of search pages. Unfortunately, sophisticated scammers can also appear among them, complete with copied logos and scraped page content. Even their website addresses can be similar. Unwary customers won’t suspect anything is amiss.
Those among the unfortunate 1 in 16 who are scammed find their bookings changed or end up paying extra when they arrive at the hotel. Sadly, a small number discover no booking has been made but their payment details have been fraudulently used, resulting in large money losses.
Scams and OTAs
The well-known OTAs are not involved in fraudulent scams or identity theft. They make millions of valid bookings a year on behalf of satisfied guests. They also provide a valuable bill board service to hotels, who might otherwise struggle to make their presence known among the noise of Google traffic.
Despite the service they offer to both guest and hotels, OTAs are not agents for the hotels nor can they act on their behalf. Travelers may find this surprising after reading the OTA websites, which often imply a close relationship with the hotels. The Act calls for more transparency so consumers know these OTAs are unaffiliated third parties. Many hoteliers would like that transparency to expose the commissions the OTAs charge. The OTAs, for obvious reasons, are vehemently against this.
The size of the two biggest OTAs, Expedia and Priceline, is a cause for concern. The majority of other respectable OTAs are simply subsidiaries of one of these two huge organizations. TripAdvisor suggests that by 2020, 94% of all OTA traffic will be controlled by just these two. Hotels are vulnerable to pressure over room pricing from a monopolized OTA system which already charges high fees and has, in the past, been accused of manipulating the room rates and hotel information.
How OTAs Win Bookings
Many people use OTAs to choose a hotel then visit the hotel’s own website for better pictures and a more detailed description of facilities. After which they return to an OTA site to make the booking. Why? Most hotel websites are informative but don’t focus enough on getting the booking. A Netaffinity report showed 13% abandoned their booking on a hotel website because they found the process too long or complicated.
OTA sites, on the other hand, are geared toward making the sale. There are calls to action at every turn, warnings of losing the best deal without prompt action, promises of free cancellation and enticing extras. Consumers are left with the belief that these are the sites they should use to make their booking.
Most, if not all, of the offers and extras given by the OTAs are also available on the hotel’s website through direct booking. The OTA is unlikely to offer a cancellation policy or extras that the hotel itself does not already make available.
The future is in direct bookings
A recent TripAdvisor report says 91% of hoteliers believe direct bookings are vital to their future. With greater transparency promised under the Act, hotels have the chance to take back control of their brand. As already mentioned, OTAs provide a valuable service by bill boarding hotels, which often leads buyers to visit the hotel’s own website. The trick is in getting them to stay on it and book direct. How?
The following will help:
- Use sales-oriented wording similar to that on OTA sites.
- Clarify cancellation policies.
- Make clear what is included, such as breakfast or free Wi-Fi.
- Ensure room prices are clear and any extras are unambiguously shown.
- Make it easy to book rooms.
Some hotels are using widgets on their sites to show their room prices are the same as those offered on the OTAs. One widget supplier claims that direct bookings for their users had increased by up to 35%. These widgets are proving so successful that Booking.com threatened legal action against the supplier but had to back down.
What The Act Means For Hotels
The Act offers long overdue protection for consumers, heightening their awareness of potential risks and giving them greater confidence in booking online. It should also mean hoteliers will no longer have to face irate guests as a result of the 15 million bookings made annually through dishonest websites.
Some hoteliers will be content that the Act is protecting guests against those dangers and also reducing the hotel’s booking problems. The perceptive hotelier, however, will see this as an excellent opportunity to reassess their online marketing. With a suitably redesigned website and the appropriate social media support, this is a chance to increase direct bookings, serve the guest better and increase profits.