The downside of booking hotels online

We’ve all done it. Booked a hotel room after conducting a search on Expedia, Travelocity, Booking.com or another online travel agency (OTA). The destination had many hotel options. As did each of the hotel listings. We booked the lowest rate, and provided our credit card info to hold the room.

Only to realize afterwards, we made a mistake!

Unfamiliarity with an OTA site and a hasty decision based on low pricing can lead to a form of buyer’s remorse that may not be easily rectified.

Unbeknownst to many casual online travel shoppers, there are caveats to booking hotel rooms online directly through an OTA. Having managed hotel websites that both competed and listed with OTAs, I have some insight into the policies and practices of OTAs, and have outlined tips here to keep you from regretting you ever clicked the “confirm” button.

Understanding OTAs

OTAs provide a valuable service to hotel shoppers, aggregating listings that users can easily view, compare and book. Rather than search extensively on Google for individual accommodations within a destination, you enter your booking parameters on one site, and receive page after page of choices for your particular date range and budget. You can filter your options on many sites, limiting your choices based on proximity to city center, available amenities like a pool or gym, guest reviews, or even by hotel brand.

Hoteliers list their properties on these popular sites to drive more “heads in beds”. Bookings through the sites, however, come at a price to the hotel that is almost always factored into the resulting rate and buyer’s experience.

OTAs charge hoteliers a “commission”, as high as 35%, for each booking executed online. The expense is justified as a marketing fee, as OTAs typically have big advertising budgets and enjoy much higher search return volumes than individual hotel websites may enjoy. What this means to a consumer, then, is that the rates found on the OTA may not be as low as those found on the hotelier’s own website.

Often OTAs advertise sales promotions, and hotels pay to participate to rank and to be “featured” and appear higher up in a returned search results page listing. While some consumers may interpret this higher position as an indicator of quality and/or value, it is simply a result of advertising participation. There is usually no reliable algorithm a consumer can count on to provide a best-in-class hotel option. It is up to each of us to read and compare each listing.

Buyer beware

One consideration when choosing where to stay is past affiliation or loyalty to a brand. If you’re a member of the major brand programs–Hilton, Marriott/Starwood, Hyatt, IHG, for example– rooms booked through an OTA typically do NOT qualify for loyalty program points. The same applies to perks offered to loyal guests, like complimentary WiFi, free water, or other services provided exclusively for members.

Another consequence of booking your hotel room online through an OTA is inferior service. If a hotel becomes overbooked, for instance, OTA customers are often “walked” to other hotels, while customers who book directly are given priority to stay. It is easy for the hotel to “blame” the OTA, and vice-versa, leaving you out in the cold, especially in dire situations (like a severe weather event). Any changes or reaccommodation must be made through the third-party OTA if you’ve prepaid, and this can turn into a nightmare in the midst of a long journey.

Sometimes, a booking made on an OTA is non-refundable, while the same room on the hotel website is offered as a more “flexible” option. Once you’ve hit the “book” button on the OTA site, you’ll be charged a penalty for cancelling, either the first night’s rate, or possibly the cost of the entire stay, depending on the site and hotel terms.

On some listings, you can prepay, or pay when you check out of the hotel. In either case, be sure to carefully consider the total amount you’ll pay, including state and local taxes, service charges and “resort fees”, if applicable. Comparing only the base rate of each hotel is like comparing apples to oranges, and you may pay more out-of-pocket than anticipated.

Finally, if you have a specific room type or location in mind, or are hoping to be upgraded upon arrival, you’re better off booking directly with the hotel. OTAs are normally relegated a “standard” or “run-of-house” rate, while direct customers receive complimentary upgrades to a higher category, better floor or view, or even a room with an added amenity, like guest lounge with complimentary breakfast or cocktails.

More tips for booking your hotel online

Take advantage of OTA platforms to narrow your search in a destination, then book directly with hotels that you find. The advanced search features, guest reviews and maps showing proximity to other hotels and popular attractions, make OTAs a great resource.

If you still want to book with an OTA, consider joining the site’s own loyalty program. Hotels.com, for example, offers members one free room night for every ten room nights booked. Booking on a credit card site like American Express, which rewards card members with Membership Rewards points (up to 5 points per dollar for Platinum and Platinum Business Cards) if booked on the American Express website, may offer even greater value.

And always, always, always, read the fine print! Click on the hotel’s cancellation terms and conditions BEFORE you confirm your booking. If you have any doubts, contact the OTA or, better still, the hotel directly.

The conventional way

While most people will start online, the conventional way to book through a travel agent may be the best option. Travel agents have access to the best available rates WITHOUT restrictions, so you’ll receive all your loyalty benefits and member perks. Your agent can also communicate any special needs or requests, and you will receive the same benefits as booking directly with the hotel. In addition, if anything goes wrong with your reservation, your agent should be able to work directly with their hotel representative to obtain a refund, credit or comparable (or upgraded) reservation on your behalf, saving you time and money!

For more information on booking hotels, or for help reserving stays for your next vacation or business trip, please contact me here.

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