Hotel price comparison sites are booming. Each one searches hundreds of booking sites and millions of hotels, encouraging you to find the perfect place to stay at the lowest price.
That's fantastic. Price comparison websites are very popular across numerous sectors for obvious reasons - everybody wants the best price, and being able to look for it in one place is perfect.
Except, have you ever noticed that when you search for hotels, the price is pretty much the same everywhere? If not, you should try it. For example, I went to Trivago, put Manchester in the search box and selected a double room with a check-in date of January 18th and a check-out date of January 19th. Put it this way, the prices were pretty much identical for the same hotel, and any discrepancies tended to be because the offers weren't identical.
So, why are the prices the same? What's the point of using a price comparison website if there isn't really a 'best price'?
Well, the prices are the same because of rate parity clauses that the big online travel agencies (OTAs) insist on, which is something we touched on in the first blog. The 'big two' - Priceline Group and Expedia - have amended their terms and conditions recently in response to court rulings in countries like France and Germany that rate parity was not fair. However, they still insist that properties do NOT sell any cheaper on their own website.
This is simply not in the interests of consumers or properties. Consumers get no choice because accommodation providers can't sell any cheaper - and their own website is the one place online that they don't have to pay huge commissions. On top of that, rate parity is not an issue in other travel sectors such as flights and car hire.
So, now we know that hotel price comparison sites are not all they seem, and we have touched on the reasons for this. But how did it happen? How did the big OTAs become so powerful that they are allowed to insist that properties can't offer a cheaper price on their own website?
The answer to this brings us back to the issue of market domination. Priceline Group and Expedia have been buying up online travel companies for years now. Expedia used to own Trip Advisor and now owns a majority stake in Trivago, the Priceline Group owns Kayak ... But yet Trivago and Kayak make huge amounts of money from telling consumers that they will find them the lowest price, something that they know isn't really possible because of the rate parity that they ask for.
All in all, it is a most unsatisfactory situation for both consumers and properties. The problem is that consumers aren't aware that hotel price comparison sites don't work quite as well as they should. Surely it's time to make them aware.