AH&LA: Misleading resellers cost consumers $5.7B in 2018

computer screen with hotel booking
According to the American Hotel & Lodging Association's findings, one out of four consumers has experienced a problem with their reservation when booking through a third party. Photo credit: Getty Images/Prykhodov

Online booking scams and dishonest marketing practices by fraudulent and misleading travel websites cost consumers $5.7 billion in 2018, according to research released by the American Hotel & Lodging Association.

“The numbers we saw in this research are completely unacceptable,” Chip Rogers, president/CEO of AH&LA, said in a statement. “Consumers are being robbed of billions of dollars every year by bad actors. In addition to third-party websites that mimic hotel websites and call centers, but are not actually affiliated with a hotel, costing consumers time and money, this new research shows just how big of a problem deceptive advertising is on some online travel agency websites.”

Some takeaway statistics from the report include:

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  • 23 percent of consumers said they’d been misled by third-party resellers on the phone or online.
  • One out of four consumers have experienced a problem with their reservation when booking through a third party.
  • More than 40 percent of consumers were upset to learn that when they comparison shop among sites like Trivago, Kayak, Expedia, Orbitz, Hotels.com, Travelocity, Booking.com and others, they’re usually just comparing subsidiaries from the same two companies: Expedia Group and Booking Holdings (formerly The Priceline Group). These two companies together control 95 percent of the online travel market.
  • 94 percent of consumers believe they should know who they are doing business with online when booking a hotel room.
  • 77 percent of consumers agreed the government should make it a higher priority to enforce consumer-protection laws against third-party hotel resellers.

“Given the continued fraudulent issues we’re seeing, [the AH&LA] reminds consumers to Search Smarter, a campaign to educate consumers about these problems and encourage consumers to slow down when booking a hotel and not be pressured by misleading advertising or deceived by fraudulent websites,” Rogers said. “We recommend consumers look before they book, take advantage of loyalty programs and book directly with the hotel or a trusted travel agent.”

Earlier this summer, the AH&LA commended Sens. Steve Daines (R-Mont.) and Amy Klobuchar (D-Minn.) on their bill aimed at protecting millions of travelers by putting an end to deceptive marketing practices by third-party hotel booking sites. According to research commissioned by the AH&LA and conducted by Morning Consult, fraudulent and misleading hotel booking transactions negatively impacted 28.5 million hotel stays and cost consumers $5.2 billion in 2017 alone.

The Stop Online Booking Scams Act intends to rein in fraudulent websites that mislead consumers into thinking they are making a reservation directly with the hotels. These third-party websites give the appearance of being the actual hotel property or affiliated with the hotel, when, in fact, they are independent operators. The bill prohibits third-party online hotel reservation sellers that are not affiliated with the hotel to advertise, promote, or sell a reservation if they state or imply that they are the actual hotel owner or operator of a hotel. The legislation also gives enforcement authority to the Federal Trade Commission and state attorneys general for those entities that fail to comply with the legislation. The Better Business Bureau has also been a partner in this effort, offering a tips page to educate consumers on how to avoid scams when booking hotels online.

Back in December 2017, the Federal Trade Commission settled a federal lawsuit with Reservation Counter, a third-party hotel booking reseller accused of using call centers and websites to mislead consumers into believing they were booking and speaking directly with a hotel. Reservation Counter also did not disclose that a traveler’s credit card would be charged immediately instead of upon check-in. The settlement resulted in Reservation Counter no longer being able to mislead consumers through these types of practices.

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