Booking portal HRS: Best price clause is unlawful
As the hotel booking portals appeared, they were a godsend for the industry – an opportunity just for sales weak smaller, often family-run hotels. One finally got the chance to be found. Some nice photos, some text, plus good prices – that was the recipe which also brought independent hotels suddenly on the road to victory. Only in the case of success a brokerage commissions to the portals were to be paid.
But the story of the portal is typical of the online world, it is a story of a curse and a blessing, the prices of established companies driven into the ground by the market dominance and power of Internet giants like OTAs. Unlike in most other industries, but the hotel booking portals rely on the hotels – and their rooms.
Meanwhile, 90 percent of all Hotels in Germany are listed at OTAs such as HRS, Hotel.de, Booking.com and Expediawith at least one of their rooms -. It has become easy to reserve from our home computer a hotel somewhere on the coast of Brazil in Fortaleza or in Bad Schwartau. And because it is so wonderfully simple, the agent rapidly gained customers – at the expense of a direct booking.
But the Hotel Grand Elysée in Hamburg Germany has claims to have paid annually about one million euros commission to the Web-giant (OTA) – and swerved: Owner Eugen Block advertised in major daily newspapers that in future he will give the best rate only if booked directly through the hotel . In Regensburg (another city in Germany) 38 hotels created the website http://www.hotels-in-regensburg.com . Inland the first ten days they saved by generated there reservations about 10,000 euros in commissions and donated the money.
The “Best price clause” is unlawful
Even if for a hotelier initially attractive, to be represented at a trendy website and get more unexpected guests booked through them, this advantage is now shrunk significantly – because the competitor is to be found there right with you. And online customers often decide to chose the cheapest of its category. For independent hotels this is ruinous in two ways: You must be very cheap and still pay a commission on these favorable rates – or their rooms are far too many nights empty.
But the more increased the market power of the portals became, the more one-sided the balance of power became, which culminated in the so-called “Best-price-clause” in the contracts with hoteliers. Accordingly, hotel owners may NOT offer their rooms cheaper on any other distribution channel – not even if the potential guest came trudging with suitcase in hand in the lobby and inquired about a free room directly.
Late last year, the German Federal Cartel Office has declared in a court case with HRS (OTA) the “Best-price-clause” as unlawful and since then takes a critical look at the contracts. This development gives hoteliers new leeway in pricing. For potential customers it means more work again to find the best price.
There are in any case of portal (OTA) to portal (OTA) some significant price differences. This is due to the different “packaging” a back door to avoid the all too easy price comparability. Sometimes the standard room is advertised without food, sometimes a deluxe room with breakfast or half board, with spa voucher or free parking in the underground garage. Even that proves that it is worth for customers to look closely before each booking.
Portals (OTAs) fight back
This is even more important after the Cartel Office decision. Of course are hoteliers keen to sell their rooms free of commission that works best in self-distribution – in the lobby, on the phone and on the hotels own website. Therefore it is to be expected now that the best price will always be found at the hotel itself as in the example of the Grand Elysée Hotel.
For guests Hotel Portals (OTAs) would then shrink to comparison tools which would provide a good grip on the local or regional market – and would bring bookings more regularly back to the hotel page. However, the portals (OTAs) are fighting back: they place their sales-candy elsewhere – by include additions. For example, the free cancellation is possible up to 18 clock on arrival a popular sales-candy.
And they improve the booking technology, facilitate sleek Apps to book and save the customer time and effort. On the field of technology, they are almost ahead of every hotelier. And on top they expand their business. Booking.com and HRS have already released apps for last minute hotel bookings and promise between 30 and 50 per cent discount for online reservation on the day of arrival.
Customers are happy. And again the hotel owner in spite of all the trouble they went through can not past the giants. Because an empty room brings hotel owners nothing. Only “plus” for the hotel he got slapped with a giant discount and painful commission he at least got a bit of money.
And the winner? The customer. Of course only if he looks closely.
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