Why booking sites are the prisoners of their own commissions
Did you hear the latest news?
The competition watchdog of the UK finds several areas of concern after eight-month investigation of booking sites.
The regulator has ordered the sites to review their practices and respond within the next few months.
So, what are those concerns?
The regulator is examining the extent to which a hotel’s ranking on a website may be influenced by the size of its commission.
This is a big problem. Currently, people are not really aware of how their hotels or rentals are being displayed. There is no clear criteria communicated on what search results are based on and how they are ranked. It is a mystery.
As you know, booking sites take in commissions, and those do not remain constant. They are permanently optimized based on the market needs, the current competition and many other factors.
And here lies the problem. The fact, that commissions are not same for all hotels, leads to a conflict of interest. While hoteliers are trusting that the algorithm will provide fair chances to all hotels, it is in the financial interest of the booking site to display hotels based on the commissions they bring with them.
Hotels, from which they yield higher commissions could be displayed more often than the ones with lower commissions.
This is clearly unfair, as the hotel can not influence the commission rates, which means that they can not influence the display rate.
Booking sites have to choose between their own financial interests and the interests of their customers. As the competition is not sleeping, they become prisoners of their own model, acting against the customer.
At LockTrip, we do not have such a conflict of interest, as we do not take any commissions. All hotels benefit us equally. It’s a fair game.
But this is not all. The regulator also found a second area of concern:
About 70% of people who shop around for accommodation use hotel booking sites, according to the regulator, but many have found the final price paid was inflated by unexpected extra charges such as taxes and booking fees added later.
This is a trick that is very common in the industry. You find a room that fits your needs for $80. But once you proceed with the payment, they tell you that taxes and “service fees” are not included. Those can easily bring the same room to over $100.
At LockTrip, all prices are final. The price at the front page is always the price you will pay.
All this shows again how important it is to grow LockTrip as quickly as possible. There are clear issues with the current state of the industry and many of those are arising from the fact that the market power is focused centrally on a few companies.
LockTrip is the first marketplace with 0% commission where you can save on average 20% on your hotel and rental bookings compared to anywhere else. Learn how to buy LOC tokens to enable access to our marketplace and its lower prices here!