Agoda’s fraudulent pricing scheme is hurting Vietnam’s tourism reputation.
“UP TO 80% OFF”
That’s right! This is Agoda’s marketing slogan and therefore it is their deliberate marketing strategy. It sounds like a great bargain, doesn’t it? The only problem is, it is not a bargain but rather a deceitful marketing scheme that has ruined the accommodation experience for countless travelers, hurt local business owners, and destroyed the reputation of Vietnam’s tourism industry.
Agoda “achieves” this “up-to-80%-off” by simply marking up hotel prices by ~400% and then “discounting” by ~80% to bring the final price back to its original price listed by hotel owners. For example, if a hotel room is priced at $50/night, Agoda would increase it to $250/night, strike out this price, and slap an 80% discount tag on, and voila!…back to $50/night.
It is a scam designed by some marketing genius at Agoda to maximize booking conversion ratio by deceiving travelers into thinking that they just got a great deal when in fact, it was simply Agoda making things up.
Just put yourself in the shoes of the unsuspecting traveler. Browsing on the website and seeing a well-reviewed accommodation available for $50/night, you thought this is just perfect for your budget. What’s even better is that Agoda is telling you that this property is typically priced at $250 a night and if you book with Agoda, you’re getting an 80% discount. It’s a JACKPOT!
So YOU, yes you, the nice and friendly traveler, arrived at this “normally priced” $250/night accommodation, expecting a $250/night facility with full concierge services, a swimming pool, and maybe even a fancy breakfast buffet, only to find out that you just got a really good $50/night homestay for $50 a night. You, the nice and friendly traveler, became frustrated because you felt that you just got deceived into thinking you got a great deal and blamed the homestay owner. If I were you, I would totally be upset as well. THE ONLY PROBLEM IS, the homestay owner didn’t even know anything about Agoda and never even imagined pricing his accommodation anywhere near $250/night.
YES! It’s a TRUE STORY. That happened to a guest at Christina’s and that’s how we found out about this fraudulent pricing scheme, and it’s widespread.
What did we do? We took care of the angry guest and tried to share with them how Team Christina’s is trying our best to contribute to the tourism in Vietnam. Nevertheless, he already felt cheated and disappointed and the chance of him returning to Vietnam in the future or recommending Vietnam to other travelers has just dropped from Christina’s typical 90% plus rate to the country’s 5–6% average…or maybe even worse. The damage was done.
Let’s go back a bit so we can share with you Christina’s experience with Agoda and how we decided to terminate this relationship over 2 years ago.
In January of 2016, Christina’s launched Christina’s Hoi An in Tra Que Village, Hoi An. We assumed management of Tra Que Riverside Resort & Spa and the legacy distribution platforms that came with it. Therefore, we had to learn how to work with Expedia, Booking.com, Agoda, and some less popular platforms. All of this was very new to us because we had only hosted Airbnb guests prior. However, instead of simply shutting down these accounts and cancelling all existing bookings, we decided to take the opportunity to explore if these traditional distribution platforms would be able to help us reach out to a wider pool of travelers visiting Vietnam.
Immediately upon getting to know these platforms, we realized how fortunate we were to have #Airbnb available to us.
What we found out was that these hotel platforms, once served as enablers for independent accommodation businesses, have become bullying and exploitative. Instead of being helpful, they’ve become a hindrance to improving guest experience. Instead of supporting, they’ve become threatening and destructive, further damaging Vietnam’s tourism reputation.
These traditional distribution platforms act a little bit like a cartel when it comes to pricing. Expedia charges 15% of booking amount, whereas Booking.com charges 15–20% depending on how much the accommodation business is willing to pay for prioritized ranking. Agoda charges a minimum 20% (from our short experience with them). This doesn’t necessarily include handling payment-processing fees. Give or take, they’re sort of all equally expensive.
In comparison, Airbnb charges hosts 3% and guests up to 12%, or effectively 13.4%, or the lowest of all the major accommodation distribution platforms that I know of.
However, we did not choose which platform to work with simply because of their pricing. If you took a closer look into why Airbnb decided to break down the fees into two components, then you would quickly realize that it’s designed to encourage better guest experience. By charging guests a non-refundable service fees, Airbnb has effectively encouraged guests to plan carefully so that their booking doesn’t hold up the availability of the smaller accommodation business unnecessarily. This results in a MUCH LOWER cancellation rate compared to the other platforms.
Why is handling cancellation so important?
Cancellations are detrimental to any small homestay businesses, especially if it’s fully refundable and cancelled close to the date of arrival, leaving rooms empty without any revenues. Airbnb is WAY AHEAD of the pack when it comes to protecting the small hosts and local businesses. So when we decided to use Booking.com, we actually set non-refundable policy for all of our properties so we can decide at our own discretion when it’s fair to provide guest with an exception.
The Deal Breaker
Of the many platforms, we decided only to take on Booking.com after experiencing working with all of them for about 3 months or so. We found that Booking.com was the least damaging because their settings allow enough flexibility to meet the needs of our business. Plus, we didn’t want to deal with the headache of managing pricing updates for so many different channels.
Located a 10-minute walk from My Khe Beach, Christina's Da Nang offers accommodation 2.4 km from Love Lock Bridge Da…www.booking.com
However, what drove us to abruptly end our relationship with Agoda was a phone call from one of their regional managers. He called me with an angry tone and demanded that Christina’s Hoi An set our prices to be the same as Booking.com’s prices, despite Agoda’s higher commission rate. He threatened to do it himself if we didn’t abide by his request.
I told him that he had no right to touch our prices and we should be able to set our prices however we want. If Agoda wanted us to lower the price, then simply lower the commission rate. Otherwise, we will not lower our prices on Agoda.
A few days later, our team told me that Agoda changed our prices without our permission. We immediately called them and demanded complete termination of the relationship and if they sold any of our rooms, we will not host their guests. We blocked all availability, removed all photos, and that was the end of Agoda for us…so we thought.
Fast forward a couple of years, Agoda manages to get back into the picture. This time, they are selling our rooms via an Affiliated Marketing agreement with Booking.com. Essentially, Booking.com allows their partners to sell the inventory that we list on Booking.com. This is not preferable to us, but it is not illegal either. What is illegal, though, is that Agoda went overboard and decided to run their fraudulent pricing scheme for our properties. This pricing practice is not only unethical, it’s illegal and breaking Vietnam’s Advertising Laws (Art. 8 (9) of the Law №16/2012/QH13 of June 21, 2012, on Advertising of Vietnam) and we will let the court determine how to handle this.
“Advertising incorrectly or causing confusion about the business competence, the ability to provide products, goods and services of organizations and individuals trading and providing such products, goods and services; about the quantity, quality, prices, features, designs, package, brand name, kinds, method of service, warranty duration of the registered or announced products, goods and services.”
This is a very serious accusation right? Yes it is and it’s almost unthinkable when one really takes a look at it. How can a corporation the size of Agoda engages in such a fraudulent marketing practice and get away with it? Even if they can deceive the typical customers and business owners, certainly someone at Agoda would have blown the whistle?
Surely someone must have said something about this right?
That’s exactly how Agoda has been getting away with it because everyone thought that surely someone would have done something.
Why is Christina’s the only one speaking up?
There can be a many reasons why people haven’t spoken up like Christina’s but I can share a few:
1. People simply did not pay attention or understand the extent of the damages.
2. Agoda has a big influence in the market and local businesses are afraid to be shut down by Agoda.
3. Spending time and money to expose Agoda does not make good business sense.
Christina’s decided, given the situation, that we have a responsibility to speak up and follow through to expose Agoda. Otherwise, Agoda will continue to negatively impact the reputation of Vietnam’s tourism industry and other platforms could end up doing the same thing, causing irreparable damages to the local economy.
Therefore, we hope that you take a look at the evidence and review the facts and let Agoda know that they need to start operating their business with integrity and stop deceiving their customers and hurting their local partners.
In an effort to resolve this matter, we ask Agoda to stop this practice immediately, provide a full report as to the extent of their Fraudulent Pricing Scheme, compensate the hospitality industry for the damages they caused, and formally apologize to their customers and to our hosts for the uncountable headaches that they have caused.
That’s my Thucents!