Do Americans really make 15 million “bogus” hotel reservations a year?

At first glance, the results of the American Hotel and Lodging Association’s latest survey look alarming: American travelers make approximately 15 million “bogus” hotel bookings a year — far more than the 2.5 million reservations previously believed to have been made through what the organization calls “rogue” affiliates sites.

These deceptive practices harm consumers who don’t get what they want or need, suffer the loss of reservations or face additional charges and fees, the trade group claims.

But appearances can be deceiving, counters The Travel Technology Association, whose members were singled out by the hotel study. In fact, a majority of American travelers trust the online travel agencies they represent and rely on them for accurate price comparisons, a new study commissioned by the organization and released yesterday shows.

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In a way, both these organizations make a valid point. Yes, there are questionable hotel booking sites — and yes, online travel agencies are a necessary part of the travel ecosystem.

But the question they effectively fail to answer is: What’s best for hotel guests?

Billions in damage?

“These findings clearly show that online hotel booking scams have eroded consumer confidence,” said Katherine Lugar, AHLA’s president.

Among the results:

  • 32% got a room that was different than what was expected.
  • 17% were charged unexpected or hidden fees.
  • 15% did not get their rewards points.
  • 14% were charged an extra booking fee.
  • 14% could not get a refund for a cancellation.
  • 9% had reservations lost or canceled.
  • 3% had their identity or private information stolen.

AHLA claims consumers have suffered $1.3 billion per year in lost reservations or extra fees and other charges, and perhaps more. According to its survey, conducted by GFK Custom Research, another 1 in 5 respondents admitted they were “not sure” if they’d also been scammed.

Public “relies” on online agencies

But is this a smokescreen for hotels trying to divert bookings from third-party intermediaries like online travel agencies, to which they have to pay commissions? Philip Minardi, a spokesman for the The Travel Technology Association, which represents online travel agencies, suggests it is. He called the research a “stunt” and says AHLA is resorting to “fear tactics” to push its message.

Online agencies do indeed provide a lot of value — first and foremost, the ability to comparison shop, he says.

“By offering side-by-side comparisons, access to the growing array of travel options and competitive prices, online travel companies have given travelers the power to search, compare, and book from the palm of their hand from anywhere in the world,” says Minardi. “Without online travel companies, consumers would have to visit dozens or even hundreds of websites and waste valuable time in order to make an informed booking decision.”

Minardi says the American public not only relies on the convenience of shopping across multiple travel brands in a single place, “but they continue to trust online travel companies with their vacation and business travel itineraries.”

In 2014, for example, Expedia helped travelers book over 146 million room nights. Each month, more than 27 million unique visitors browse Orbitz Worldwide sites. Priceline.com works with over 370,000 hotels in 170 countries. And in the state of Florida alone, more than 5 million hotel nights are booked annually through online travel agencies, and nearly 30 percent of those nights are booked by Floridians, says Minardi.
But don’t take his word for it. Travel Tech on Monday released its own survey that says 55 percent of U.S. travelers choose online travel companies most when searching for hotels. It also suggested that nearly 7 in 10 Americans see booking on online travel company platforms as “convenient and safe.”
Jennifer Michels, a spokeswoman for The American Society of Travel Agents, didn’t directly address the AHLA findings but instead stressed that a “trusted” travel agent will “steer you away from rogue operators as well as take care of you while you are on the road.”
So where are the victims?

The view from the ground floor of this debate is a little different. Consider a real-life example of someone who books through what AHLA considers a “rogue” site. At worst, their reservations are not valid and they have to either find a room elsewhere or pay a higher rate.

But that raises an interesting question: If 15 million bogus reservations are being made every year, where are the victims?

Sure, you can find anecdotes about people who think they’ve booked through an official hotel site, but actually made reservations through a third party. But if these AHLA numbers are accurate, then consumer advocates and travel journalists, like myself, should be receiving a crush of complaints from unhappy hotel guests. I’m not.

So what’s happening here? The hotel industry’s agenda is clear: it wants people to skip the intermediary. “It’s always safest to book directly with the hotel,” Lugar of AHLA says. It has waged a clever PR campaign to persuade people that the only safe bookings are direct bookings.

The third-party websites they’re targeting are not small-time operators. They’re billion-dollar, publicly-traded companies, but they aren’t blameless, either. Hotels claim these booking sites are taking their cut without providing any value to the property or to the customer. They’re essentially leveraging their dominant market position to earn an unjust profit, the hotel industry suggests. That’s one reason AHLA vigorously, but unsuccessfully, opposed the recent merger between Orbitz and Expedia.

Consumers are caught in the middle of this intramural squabble. If hotels succeed in pushing more business to their own websites, consumers could lose the ability to compare hotel rates quickly. If third party sites prevail, there will be a class of bloated websites that simply process hotel transactions and take an overly generous cut of the money. Over time, that could push hotel rates higher.

No, there aren’t 15 million victims of “rogue” booking sites. But in this fight, no matter who wins, guests are likely to be the losers.