AH&LA Takes On Fraudulent Hotel Sites and Airbnb

by Harvey Chipkin

Katherine Lugar, CEO, American Hotel & Lodging Association

New York – The American Hotel & Lodging Association will continue its battle against the policies of online travel agents that deceive consumers, as well as online booking scams like sites that claim to be official hotel sites, but are not, vowed CEO Katherine Lugar at a Manhattan press event this week.

Also in its cross-hairs are Airbnb and other “home sharing” companies that the association claims are establishing a growing network of “illegal hotels.”

AH&LA is currently spending a lot of time addressing the lack of transparency among online travel agencies, Lugar said, where “the consumer is unaware of how many booking brands are actually owned by larger OTAs. A full 75% of all third parties roll into Expedia, and another 20% into Priceline. Consumers believe they are getting a choice but they are dealing with very few companies.”

As a result there is an uptick in fraudulent websites that pose as hotel sites but either do not provide actual bookings or do not provide hotel loyalty program points.

“There are an estimated 15 million fraudulent bookings a year,” Lugar said, “often with travelers showing up at a hotel only to find they have no reservations. It amounts to $1.3 billion in those kinds of bookings.”

Other online scams she cited include:

  • False sense of urgency, with sites claiming there are only one or two rooms left when that is not the case.
  • Hidden service fees.
  • Pay-to-play site models where hotels that pay more show up higher in the search.

To deal with these and other issues, a bill called the Stop Online Booking Scams Act was introduced in Congress in February.

While there is a place for OTAs in the industry, “there should be transparency and real choice,” said Lugar. “The surest and safest way to book is directly through the hotels’ own sites.”

Asked if the association is working with other industry groups like ASTA on these issues, Lugar said, “We work with them when our interests are aligned.”

And asked about controversial hotel fees like resort fees, Lugar said that only 7% of hotels charge those fees and that hotels in general try to follow FTC guidelines on consumer-friendly booking policies.

There was also positive news from the AH&LA, which recently commissioned a survey showing this will be a strong summer for travel. Among the findings:

  • 74% of those surveyed are planning a vacation.
  • 80% of those will travel domestically, the rest internationally.
  • 71% will spend $5,000 or more on their trips.

Home sharing
On the subject of home sharing, Lugar said the occasional renting of a private home is not an issue. She asserted that the problems lie with “the growing trend in platforms like Airbnb to host commercial operators who buy apartments and run them as hotel rooms 365 days a year without complying with local laws. They have an obligation to pay taxes and respect all other local regulations.

“This is broader than just the impact it has on hotels,” said Lugar. “It’s about the affect on communities that suddenly have commercial businesses in their midst; and on affordable housing, which becomes more difficult to attain when home sharing becomes prevalent in a community. It’s matter of transparency. Our research showed that 30% of Airbnb rentals represent fulltime businesses and that 40% of hosts have two or more rental units.”

As part of its campaign, the association is showcasing individuals in a number of cities who now live in buildings almost entirely occupied by Airbnb units or who are being pushed out by landlords eager to establish Airbnb accommodations.

Asked if the association is making progress in this campaign, Lugar said it is and to “watch closely over the next six months. You will see a lot of activities in a number of cities dealing with this. We are also focusing on enforcement where there are already regulations. To that end, we are actively engaged with groups like the U.S. Conference of Mayors.”

 

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