Online Hotel Booking Scams Cost Consumers $5.7 Billion Annually

Nearly one in four consumers are deceived by online booking scams and dishonest marketing practices by fraudulent and misleading travel websites, according to new research from the American Hotel & Lodging Association (AHLA).

In fact, in 2018, 23% of consumers reported being misled in some way by third-party booking sites, translating to more than $5.7 billion in online booking scams, the AHLA said. These third-party travel resellers use a variety of marketing tactics to mimic hotel websites and call centers, but are not, in fact, affiliated with the hotel.

The study was conducted by Morning Consult and Kalibri Labs, and polled 2,200 adults in the U.S. in July 2019.

“In addition to third-party websites that mimic hotel websites and call centers, but are not actually affiliated with a hotel, costing consumers’ time and money, this new research shows just how big of a problem deceptive advertising is on some online travel agency websites,” said Chip Rogers, president and CEO of AHLA.

Over 40% of consumers were upset to learn that when they comparison shop among these "digital middle men" - Trivago, Kayak, Expedia, Orbitz, Hotels.com, Travelocity, Booking.com, and others - they're usually just comparing the same two companies: Expedia and Priceline, which together control 95% of the online travel market.

The AHLA is encouraging consumers to “Search Smarter,” a campaign that is aimed at helping travelers avoid lost reservations, additional fees, and potentially ruined vacations by booking with trusted travel agents or directly with hotels.

“There is still a lot to be said for the human connection and the personal touch for travelers who want to insure they have a good experience away from home,” said Roxanne Boryczki, MCC, president of AZ Trails Travel. She has seen firsthand clients who have needed assistance with hotel bookings they have made online that were not what they wanted, or they made in error and got themselves locked into non-refundable rates.

“A couple of times we have been successful in reaching out to the booking platform and securing a refund for the client,” Boryczki said. “We have also had clients who walk in the door and ask ‘just what does a travel advisor do for me,’ then they go into the stories of how they were jilted by online booking engines and had moved to different hotels. Usually we explain to the client that this is exactly the reason why you book with a professional travel advisor. Then we and they have more control over the experience at the hotel.

“What the public often doesn’t realize is that for agents still booking in a GDS system, we have access to Expedia rates and BAR rates and Radius rates, so we can get them a good price, but we can do it in a way where we have some amount of influence over the outcome. If a hotel has put our clients into a room that is not acceptable, they know to reach out to us and we advocate on their behalf to resolve the issue.”

A majority (77%) of Americans want the government to make it a higher priority to enforce consumer protection laws against third-party hotel resellers. The AHLA said it will continue to advocate for Congressional passage of the Stop Online Booking Scams Act of 2019 (H.R. 3956), a bill that would protect consumers by increasing the transparency and security of the online booking process.

Introduced in July by Representatives Peter Welch (D-VT), Gus Bilirakis (R-FL), and Lois Frankel (D-FL), it would prohibit third-party online hotel reservation sellers who are not affiliated with the hotel to advertise, promote, or sell a reservation if they state or imply that they are the actual hotel owner or operator of a hotel. It will be considered by the Committee on Energy and Commerce next, before it is possibly sent on to the House or Senate as a whole.