Consumers Want & Deserve Transparency from Online Travel Agencies

  • Online travel agencies (OTAs) often lump together service fees with the taxes they charge consumers and don’t allow consumers to view the details of their transaction to determine exactly how much they are paying in taxes versus the service fee.
  • In contrast, on hotel websites, consumers generally can view the exact details of what is included as part of their transactions prior to booking.
  • 40% of consumers are unaware that they are being charged service fees when booking through an online travel agency. [1]
  • 61% of consumers would rather this fee be broken apart and displayed separately that lumped together in the price. [2]
  • A majority (57%) of consumers have negative views of the practice of lumping the fees and taxes together, describing this as misleading, hidden and shady.[3]
  • A majority (64%) of consumers say online travel agencies should not receive a fee from consumers when learning they also receive a commission from hotels.[4]
  • A significant majority (89%) want to be informed of the fee at the “beginning of the process when looking for rooms”.[5]

 

IN MANY JURISDICTIONS, ONLINE TRAVEL AGENCIES ARE NOT PAYING THEIR FAIR SHARE OF TAXES.

  • In many jurisdictions, online travel agencies do not remit taxes on the amount that consumers pay to them; rather they remit taxes only on the rate they pay to the hotels, which means they pocket the difference.
  • Hotels, on the other hand, apply the occupancy tax rate to the full price paid by the consumer.
  • This deprives cities and states of much needed tax revenue, while not providing additional savings to consumers. Many states and localities throughout the country contend that online travel companies are not meeting their tax obligations and have filed dozens of lawsuits to recover this lost revenue.
  • A consumer class action suit in Washington State was settled in 2009 with $129 million dollars being paid by the OTAs to settle claims that these practices with respect to taxes and fees were deceptive to consumers.
  • Online travel companies need to play by the rules and remit all state and local taxes.
  • HotelTaxFairness.com offers a comprehensive overview of the issue.

 

THERE IS A GROWING PROBLEM OF FRAUDULENT WEBSITES AND CALL CENTERS TRICKING CONSUMERS INTO THINKING THEY ARE BOOKING ON THE HOTEL WEBSITE.

  • With online travel bookings surging over the past several years, averaging some 500 hotel bookings per minute, the rate of scams has increased.
  • Research shows that an increasing number of consumers are misled into making hotel reservations through fraudulent websites and call centers operated by third-party affiliates of online booking agencies that give the appearance of being a hotel’s website, but actually have no relation to the hotel.[6] 
  • As consumers increasingly move to mobile booking, smaller screens also make it harder for consumers to differentiate between the scam site and the legitimate hotel’s website. Indications that could have otherwise been key to consumers knowing the difference, like URLs, are often hidden.
  • This translates to some 15 million hotel bookings a year and $1.3 billion in money going to bad bookings, meaning consumers are not getting what they want and need, including lost reservations, additional room charges, cancellation and booking fees, incorrect accommodations and a lot of hassle.

BOOKING DIRECTLY WITH THE HOTEL PROVIDES CONSUMERS WITH THE BETTER VALUE AND THE ASSURANCE THAT THEY WILL GET WHAT THEY WANT AND NEED.

  • The best way to ensure consumers receive the accommodations they want and need from start to finish is to book directly with the hotel. They will often get a better value and assurance of receiving their reward or loyalty point.

 

[1] Axis Nationwide Public Opinion Poll. April 6-10, 2016 

[2] Axis Nationwide Public Opinion Poll. April 6-10, 2016 

[3] Axis Nationwide Public Opinion Poll. April 6-10, 2016 

[4] Axis Nationwide Public Opinion Poll. April 6-10, 2016 

[5] Axis Nationwide Public Opinion Poll. April 6-10, 2016 

[6] GfK Custom Research. (2015). Hotel Online Booking Sites. Retrieved from https://www.ahla.com/press-release/new-study-reveals-some-15-million-online-bookings-are-scams-rogue-websites