Entrepreneur Dick Smith has slammed online travel agencies (OTAs) such as Expedia and Booking.com for “exploiting and extorting” Australian hotel and motel owners and has called on consumers to boycott the services.
The outspoken businessman believes small businesses across the country are being shafted by the online booking giants, which he says are charging owners exorbitant rates for booking referrals.
“Motels are forced to sign up, or they won’t get business,” Smith told SmartCompany after posting an online video about the issue.
“In the 1950s, if hotels didn’t pay criminal gangs money their premises were burnt down … it’s similar,” he said. “They’ve worked out a way of extorting money from small Australian businesses.”
OTAs have boomed alongside the proliferation of the internet in recent years, with US-based Expedia Group (which owns namesake Expedia.com, Hotels.com and Trivago) and European company Booking.com emerging as major players.
But despite being popular with consumers, the business owners SmartCompany spoke to said the services have been a curse, rather than a blessing, on the local accommodation industry.
“They’re ripping us off,” Golden Hill Motel owner Mark Henderson says.
Several owners reported paying anywhere from a 12–17% commission on booking referrals through OTAs.
Many motels charge customers more in an attempt to absorb the added cost, but this has triggered customer rage.
“Customers get upset when the rate is higher,” Henderson says, “but if you walk in off the street I might charge you $100, rather than $120.”
Another motel owner, Charlie Loftus, says customers had been “brainwashed” into thinking OTAs were cheaper than direct booking.
“Trivago has recently been running a campaign with the innuendo that hotel sites and hotels directly are not the cheapest option when they are,” he told SmartCompany.
Loftus believes government regulation has failed to keep up with the disruptive impact that the internet has had on the accommodation sector, and that small business owners were paying the price.
“The internet has introduced a completely new system into the accommodation sector,” he says.
“Government regulation hasn’t kept up with the explosion of the internet.”
Smith, who has called on customers to avoid the platforms, believes search engines have made it difficult for smaller players to compete with OTAs, which benefit from top ranking spots on Google.
Henderson echoed that sentiment, saying that search results for his business turned up OTA booking pages before his own website.
“It just isn’t a level playing field,” he says.
SmartCompany contacted Expedia Group and Booking.com for comment.
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