Last month’s announcement by the CMA that it was launching an investigation into hotel booking websites, highlighted some important issues about hotel digital marketing.
The CMA has questions over their clarity and accuracy. The primary concern being that customers are unaware of the tactics used by hotel OTA comparison websites which may mislead customers, and be using pressure sales techniques on them to book – eg. those flashes claiming a hotel is in “high demand” and there is only “one room left on our site”. Then there are issues around the promotion of discounts and are the sites skewing search results to favour hotels paying the highest commission? How are they calculated, and has this been done in a way which complies with UK law?
While I welcome the CMA’s inquiry, it is important to put the issue into context, and there are key points to remember:
These sales techniques are hardly new. They are merely an extension of the way that hotels, travel and many other goods and services have been sold like this in the past, perhaps not as transparently. Remember when customers walked into a travel agent’s shop to make their holiday booking – did sales agents ever consider the motives behind the advice given, and with the incentives to steer customers towards a particular hotel and tour operator. This without giving the customer the transparency of viewing the choice available on the GDS in most cases.
Any salesperson knows the psychological power of suggesting that they have another purchaser who is on the point of committing. Every market trader’s vocabulary is littered with words like “buy now”, “bargain” and “discount.” Think how retailers price items high for a set period, so that they can discount them in a ‘sale’ later.
Pressure sales techniques are not limited to hotel booking sites. What about airlines and rail companies? Recognise the phrase “only three seats available at this price”? These claims may well be true on the day that you are making the booking. If those seats are taken, then the fare will ratchet up to the next level. But, equally, they may well be cut again at a later date if bookings slow. Is that unfair or just clever marketing?
The power of Google rankings – where the vast majority start their hotel search, are often headed by a series of sponsored listings – that of OTA’s and hotels, with mirror marketing techniques arguably compromising the value of the OTA and hotel ‘partnership’.
We must remember the positive side of these OTA hotel comparison booking sites. They have contributed heavily to the growth of incremental hotel bookings, liberating independent hotel guests with truly worldwide distribution. They have invested heavily in hotel booking technology and made pricing much more transparent, despite the questions that remain over mirror marketing and the way hotel offers are displayed.