Unscrupulous housing service companies rising

Frank Wolfe

A drawback of hospitality technology is that it has allowed unscrupulous housing service companies to get involved in the reservations business with limited or no connections to the brands that they allegedly sell rooms for. This problem is especially evident in large cities that host myriad professionally run conventions.

These housing service companies work in a particular way. When conference exhibitors are listed on the conference’s website, ahead of the event, for the benefit of customers and potential customers, their information becomes available for everyone else to view, too. That allows housing service companies—and, in some cases, thieves—to harvest the names and addresses of all the conference exhibitors. This information is then given to reservation call centers. They contact the exhibitors and say things like, “we can offer rooms lower than those posted,” “we only have a few rooms left,” and “a group just cancelled, so we have rooms available that were previously sold.”

Some of these housing service companies are making reservations and charging the hotels a 10-percent fee, and they are charging the client an additional fee per room night. These companies generally require full prepayment for all rooms reserved, with no recourse for changes, transfers or cancellations. In other cases, these companies don’t make any reservations and allegedly sell credit card information. When hotel guests show up, they not only don’t have a reservation, but they also may not be able to find a place to stay for popular conventions.

This practice is damaging to hoteliers, convention planners and guests. For the semi-legitimate company that makes a reservation, you unknowingly assisted the poacher, possibly caused the planner to have to pay you attrition if the rooms were booked outside of the group room block, and you are paying a booking fee unnecessarily. The guests have been duped by one of the unscrupulous housing service companies, and they show up angry at your hotel because they believe they have a legitimate reservation.

So, what can members of the hotel community do to help combat this problem? Some hotel companies have started notifying convention planners if they notice patterns of reservations coming in through a back door to allow them to take action; some have cancelled the reservations and put them back on the third-party reservation company; and some have allowed audits of groups with patterns very similar to the convention in-house.