Booking Holdings was testing a product under the name Booking Basic, offering heavily discounted rates with a number of restrictions.
The launch provoked accusations that the company was in violation of wholesale contract terms with hotels, as the OTA leveraged its range of business partners.
Using the tagline “Save more with just the basics,” Booking.com featured discounted restricted “basic” rates that must be prepaid and are non-refundable and often lower than Booking.com’s own rates.
According to the small print, the reservations were facilitated by “third-party business partners”. Partners include Booking Holding’s own Agoda.com and Ctrip.com, in whom Booking Holdings owns an 8% stake.
Max Starkov, founder & director, Hebs Digital, said: “The problem is that these ‘basic’ rates come from wholesale and group rates hotels have given Agoda and Ctrip for specific package programmes, not for public use or unbundled sales and global transient distribution, which is in clear violation of the wholesale contract terms.”
Starkov advised hotels to amend your agreements with Agoda, Ctrip, and other OTAs, bed banks, and wholesalers “to include provisions banning the use of group/wholesale rates for transient customers or selling discounted rates that are meant for packages in a “naked” form, i.e., unbundled from air, car rental, or local tours and activities. If you experience any resistance, stop providing these OTAs, bed banks, and wholesalers with wholesale inventory and pricing altogether.”
Earlier this summer Expedia raised ire with its own naked rate product, with Add-On Advantage, which allowed customers to take advantage of package savings without having to book all the elements at the same time.
Aaron Price, SVP, global marketing at Brand Expedia, said: “Packages are still a great way to save, but we recognise it isn’t always the easiest or most convenient way for travellers to book. A recent study shows more than 40% of people prefer to book their flight first. The launch of the Add-On Advantage is yet another example of how we are listening to our travellers and helping to bring their next trip within reach.
“People make an average of 43 searches before booking anything and getting the best price remains the top concern for people booking travel. No longer will they need to visit multiple sites to know they’re getting an unbeatable deal on accommodations simply because they booked a flight, car or package. Better yet, it takes away the pressure of planning and paying for everything up front.”
The launch came after new package holiday rules came in on 1 July, giving consumers protection when booking package holidays, but only when booked all elements are booked at the same time.
The Association of Independent Tour Operators said: “A true tour operator not only provides full financial protection, but also takes full responsibility for all aspects of its holidays and for the actions of its suppliers.
“Expedia has walked away from any such responsibility. There is nothing illegal about what they are doing but they are cynically encouraging the consumer, for no good reason, to lose out on all that gold-plated consumer protection. The average consumer won’t of course realise this until they need the missing protection. Expedia will save a lot of money, but is behaving in a very irresponsible way.”
Expedia responded: “We know from research and what we see on our site that a good deal of people want to book their flight or car first, then come back and book their accommodation at a later date. We see the Expedia Add-On Advantage as a bonus for people who require time and flexibility to book their trip.
“Our website footers and booking terms and conditions provide clear information to consumers on the level of protections that they have depending on the travel products that are booked.”
HA Perspective [by Katherine Doggrell]: There we were thinking that the OTAs were making friends all over the world to offer more inventory, when really they were giving it access to all sorts of fun new rates. If not the initial motivation, then certainly a handy bonus and in many way one which the airline and hotel sector had already got wise to, loving a cheap, non-fundable offering.
Except it’s no fun when someone else is offering your special rate, so expect a certain amount of kicking off and small-print checking in contracts.
What the sector will wait to see is whether this test is adopted and Booking becomes more of a marketplace. If it does, it is going to get ever-harder for hotels to persuade customers that booking direct really is cheapest and puts the cost of those loyalty programmes back in focus for owners. The OTAs have shown that when they say they can compete on price, they really do mean it.