European hoteliers are expressing growing concerns over Booking.com’s business tactics, calling for regulatory intervention. The European Commission’s recent actions have brought this issue to the forefront of industry discussions.
A report from Hotrec, a European hospitality association, highlights allegations of unfair treatment and anti-competitive behaviour by online travel agencies, particularly Booking.com. The findings have sparked significant debate within the sector.
Allegations of Unfair Business Practices
Hotrec’s report reveals that European hoteliers are heavily reliant on major online travel agencies (OTAs) for bookings, yet many feel disadvantaged by their practices. According to the report, half of the hoteliers surveyed experience unfair treatment and price undercutting by OTAs.
Marie Audren, Hotrec’s director general, stated, “Hotels face unfair business practices from Booking.com every day – financial loss, operational strain and reputation damage. This must end.” The report further accuses OTAs of high commission rates and monopolistic behaviour.
Impact on Direct Bookings and Commissions
The study found that direct bookings made up 51% of hotel reservations in 2023, a decline from 58% in 2013. Conversely, bookings through OTAs increased from 20% in 2013 to 30% in 2023. Booking.com alone accounted for 71% of these OTA bookings.
High commission rates and unauthorised discounts by OTAs were among the widespread complaints. More than two out of five hotels (43%) reported being undercut on price, with some indicating this happened frequently.
Concerns Over Data Control and Transparency
Hoteliers also expressed concerns about data control. They accuse Booking.com of withholding guest data, preventing hotels from offering better rates directly to consumers.
Additionally, there are issues with OTA practices like reselling bookings from other platforms, leading to pricing inconsistencies and booking errors.
The report highlighted problems such as poor communication with guests and difficulties contacting OTAs for support, exacerbating operational challenges for hoteliers.
Reliance on OTAs Despite Challenges
Despite these challenges, nearly half of the surveyed hotels rely on OTAs to sell a third or more of their room nights, with smaller hotels being the most dependent. This paradoxical reliance underscores the complexity of the relationship between hotels and OTAs.
The report notes the operational strain and reputational damage caused by these dependencies, yet the necessity to partner with OTAs remains high due to their significant market reach.
Regulatory Response and Future Implications
In response to these issues, the European Commission (EC) has designated Booking.com as a ‘gatekeeper’ under the Digital Markets Act (DMA), which aims to ensure fair competition. Booking.com has six months to comply with DMA regulations.
Margrethe Vestager, EC’s executive vice-president for competition policy, commented, “Holidaymakers will start benefiting from more choice and hotels will have more business opportunities following our decision.” The EC can impose significant fines for non-compliance, highlighting the seriousness of the regulatory stance.
Commissioner Thierry Breton added, “Booking is an important player in the European tourism ecosystem. We will work to make sure it fully complies with the DMA.” The DMA represents a critical step towards addressing the power imbalance between OTAs and hoteliers.
Broader Industry Impacts
The implications of these regulatory measures extend beyond Booking.com. Other ‘gatekeeper’ platforms like Google and Apple are also under scrutiny, which could lead to broader changes in how digital platforms operate within the travel industry.
Google is currently being investigated over potential biases in its search results, including Google Flights and Google Hotels. The European Commission’s proactive stance underscores the importance of fair competition in fostering a healthy industry landscape.
The report by Hotrec and the subsequent designation of Booking.com as a ‘gatekeeper’ by the European Commission highlight the significant challenges and complexities within the hospitality sector’s relationship with OTAs. Regulatory actions are a crucial step towards ensuring a fairer market.
As hoteliers navigate these regulatory changes, the industry’s future will likely see a more balanced dynamic between direct bookings and OTA partnerships, ultimately benefiting both consumers and service providers.
