It makes total sense for hotels to want to act like Apple and strictly control the cost of their assets, but they're kidding themselves if they think consumers can't figure out what's going on.
Press the bright yellow “check prices” button on TripAdvisor at your peril. Suddenly your screen is blasted with hotel booking websites jockeying for your attention, all promising “best price guaranteed” or “we match the price or your first night is free”. But the result of this competitive hubbub? Nearly every site appears to offer the same price and you end up wondering why you should bother trawling through so many pop-ups.
But, maybe, it’s not that surprising that the price “choice” offered on TripAdvisor, the world’s biggest hotel review site, can seem so limited. When the competing results flash up from Hotels.com, Expedia.co.uk and Venere.com, they are within a few pence of each other because … well, the company that owns TripAdvisor also owns Hotels.com, Expedia and Venere. So it’s virtually pointless obtaining separate quotes.
For example, try booking a Holiday Inn for two nights in Amsterdam this autumn. The TripAdvisor “check prices” button told me it would be £170.64 at Expedia, £170.64 at Venere and £171 at Hotels.com.
To be fair, TripAdvisor’s “check prices” button doesn’t take you purely to its sister sites. For instance, it nearly always shows offers by Booking.com, the biggest hotel reservation site and deadly competitor to Expedia.
So what did Booking.com offer on the two nights in Amsterdam? Er, £170.63. Or 1p cheaper. That’s competition for you.
There is no suggestion of active collusion between the competing websites to offer near identical prices. That would be illegal. But behind the lookalike prices is a practice that has become standard in the industry – “rate parity”. The big sites pressurise hotels to offer the same price, letting them advertise as the “cheapest” – and prevent smaller competitors from undercutting.
This week the issue hit the US courts with Expedia, Booking.com plus numerous other sites and big hotel chains (such as Hilton and IHG, owners of Holiday Inn) accused of conspiring to fix prices. Travel sites “created the illusion” consumers could seek out the best deals, Steve Berman, an attorney for the plaintiffs, told Reuters. “The reality is that these illegal price-parity agreements mean consumers see nothing but cosmetic differences and the same prices on every site.”
The major booking sites and hotel groups vigorously contest both the US lawsuit and the OFT action, and argue rate parity is not anti-competitve. But if the OFT rules against them, the fines could be potentially up to 10% of their turnover.
The lesson? Buying over the internet doesn’t automatically mean you’ll obtain the best price. And from my own – admittedly limited – research, always try the hotel’s own website first. I’m off to Croatia in September. The hotel I’m considering was quoted at £464.50 on Booking.com, £463.05 on Expedia, £463.00 on Hotels.com, £463.55 on Venere – and £359 on its own site.
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