The Federation of Hotel & Restaurant Associations of India (FHRAI) has warned the leading online travel agencies (OTAs)- MakeMyTrip and Goibibo (also owned by MakeMyTrip) – of a nationwide protest if the issues raised by its members are not resolved amicably. The association has alleged that the business practices of the two agencies were ‘exploitative, unethical and divisive’ and led to ‘predatory pricing’ and other market distortions.
FHRAI members have claimed that these travel agencies or OTAs charge commission that range anywhere between 18 and 40 per cent. “The exorbitant commissions have been adversely impacting revenues, business and the livelihood of hoteliers”, said a statement. FHRAI has claimed that large number of ‘illegal’ and ‘unlicensed’ bed and breakfast (B&B) accommodation are hosted on the OTAs.
“More than 40 per cent of the room inventory available on the OTAs is illegally operated. The so-called B&Bs are operating without valid licenses from local or state authorities. Since these operators do not have to pay for licences and the statutory fees, they are cheaper by default,” said S K Jaiswal, vice president (North) at FHRAI.
The statement said that after securing discounted rates from a hotel, the OTAs further discount it on their online platforms without the hotel’s consent. This damages the hotel’s reputation, and also simultaneously distorts the market scenario. Ironically, the OTAs have a clause in their agreement that forbids hotels from discounting their own rates but are themselves free to do so. “This disparity is not just unfair but is clearly intentional and is done with the objective of market cannibalization,” the statement said.
It was reported earlier that a large number of hotels in Ahmedabad have stopped honoring the bookings made on these two OTAs. Hotels and Restaurant Association (HRA) Gujarat said recently that it has chosen as the preferred online booking partner for reservations. A MakeMyTrip spokesperson, however, said it is business as usual for the company in Gujarat.