I usually do a lot of homework before I travel, which includes checking out prices of as many hotels as possible, on as many websites as possible. The price differences between sites keep amazing me! There can easily be up to around 50% difference between websites which is why I think people tend to love “lowest price guarantees”. It´s a jungle out there and unless you put quite some time and effort into it, it´s almost impossible to see through it.

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Hi,

I am in total agreement with the UK competition laws and I believe that healthy competition is good for any company. This whole saga within the industry at the moment, reminds me of a few years ago when the UK saw many small retail companies loosing out to the giant supermarket chains, not completly the same situation, but….

If competition laws within the hotel booking industry are not being adhered to, action needs to be taken before we see the smaller hotel booking companies loosing out to the giants, in the same way the traditional grocers did!

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There are cases of hotels threatening some smaller websites as they have undercut a major broker. The hotel has been in turn was threatened by the major broker. This has been recorded and forwarded to the relevant people.

The problem comes from “Low Price Guarantees” which are enforced by large sellers of a hotel to ensure they have best rates. Big company comes along and says gives us the lowest rate and we promote you as a key partner, if however you do not honor this then will bill you X Thousands for breaking your word. Small company comes along and says we can sell this hotel at a break even or loss and undercut everyone else and have the best rates. The hotel does not know this is happening till BIG Company comes along and says stop this or we will charge you our penalty.

To me this is restrictive practice as it does not allow fair competition. Is a major problem, if not controled I feel it could be.

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After years of booking hotel rooms though the cheapest website we could find – and “enjoying” a stay in the worst rooms they had to offer us as a result – we’ve returned to contacting the hotel direct, which frequently turns up a comparable rate and a better room too.

The inner workings of the travel industry are indeed complicated, Darren. They baffle me too.

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Hi Darren,

We went to Turkey last week to find out that we paid more for our hotel room through Expedia than we would have done if we had to book direct. Shocking really!!! You think you are getting a good deal until you get there…

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I am in agreement with everyone that has commented.

We stay in the same resort every year, and have found that it is much cheaper to book direct with the hotel. Also, if you are a returning customer, we have found that the hotelier has given us a good discount.

It is called customer loyalty – something all travel companies struggle with these days.

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Have you not given it any thought that Skoosh could be simply in this for the publicity?

Why have the other smaller hotel booking companies not released a statement about this “problem”?

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Hmmm… Bewleys Hotel in Leeds 21Oct, Skoosh is at £62.08… but I can do – a travel agent!!! – can do £65.90 Oh!… but with me… you don’t have to pay anything upfront and you can cancel without penalty up to 14:00 day of arrival… a few little things that may make up for the extra £3.82 you have to pay me. Oh! And it’s commissionable, so you don’t need to pay me a fee.

Just thought I would throw that in… Skoosh may be cheaper BUT is it “best value”?

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Darren –

I can add a few items:

- we are not really speaking about price fixing here (i.e. “secretly agreeing to keep prices artificially high”), but just commercial negotiations. In the case mentioned above, a guarantee to provide the lowest possible rate to a partner is just a commercial agreement that a hotel would agree to in exchange for something. And it obviously doesn’t inflate prices, on the opposite it only lowers them. There are other murkier situations.

- Keep in mind it is absolutely impossible to set a common rule for every hotel, every room type, and every day of the year. If someone finds a good rate on Expedia for a twin with breakfast on Hotel X on Oct 19th 2010 it doesn’t mean that Expedia also has the lowest rates on other dates, on other rooms, or on other hotels. There is no rule.

- In particular the rule “it’s cheaper at the hotel direct” is a legend. Here is how it works:
big company A can pre-buy some room nights to hotel B at Extremely Low Rate. Big company A will pay those rooms to hotel B in all cases. Hotel B is not very happy about the Extremly Low Rate, but they are happy because they get some guaranteed money, whatever happens. Big Company A will then take the risk to sell those rooms at whatever rate they can (or not sell them at all, and make a loss). In the meanwhile, Hotel B will try to sell the other rooms at the highest possible rate. So – again depending on the specific date, room type etc… big company A can sell the same room lower than Hotel B direct or than other agents, but still higher than their Extremely Low Rate, hence making some margin. Perfectly legal, no price fixing, no catch.

- Now in the same example imagine you walk up to the hotel desk directly on the same night asking for a room: the hotel has already sold some room at Big company A at very low rates + has managed to sell some other rooms at higher rates thorugh other channels + has only a few rooms left + they know you’re on the street without accomodation: what rate do you think they’ll give you?

- The answer: there is no rule, again. Some hotels might have a strict price management policy that says that once the cheap rates have been sold, they can only sell the higher rates. No chance for you. Other hotels on the opposite would be relaxed that they have already sold most of the rooms and would be happy to fill in one extra room by giving you a decent rate. And of course, it all depends on the date, location and expected occupancy. I once got stuck at St Pancras due to a Eurostar failure, guess what rates I got from the shabby hotels nearby… all of the sudden they were all above £150.

Just for the overall picture – the situation can be different in the US with a few large chains.

The first poster is right: whatever your situation, you should shop around.

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The issue within the industry is simply this: The OTA (online travel agents) are dictating to the hotels where they sell their rooms, special offers and who should have what. Basically they are demanding that any offer that is available on one site should be available on another, if not the consequence is that you will be out of parity and you will be suspended from their site.

What they forget (whilst dictating to us) is that the comission levels that are paid are ALL different, ie one channel is 20% and other 15% and another 30%. So why should we sell a special deal on a site charging a high comission, it has gone behond rate parity of Best Available rates.

The result is that there will be little choice for the consumer, the only ‘ get out clause’ is that the hotels website is able to load whatever they wish – FOR NOW.

So go direct for best prices.

I think that this is the tip of the iceburg.

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