Booking.com just demonstrated the power it wields, argues David Weston of the B&B Association
A giant US tech platform is unilaterally changing the terms of trade of thousands of small British businesses.
Booking.com announced on February 4 that it is reducing the number of ‘policies’ on deposits and cancellation fees it ‘allows’ hotels, B&Bs and guesthouses to have from more than 600 to 70 or so. The change will happen on April 6 with no consultation.
This so-called ‘simplification’ will hugely reduce the amount of control business owners have over their bookings, their financial risk and their cash flow.
One B&B owner commented: “This is very serious indeed and will cause huge disruption to the way many businesses have happily and successfully operated for a long time.”
In some cases it will result in increased deposits for consumers – for example, hotels charging a 30% deposit now will have this changed to 50% on April 6.
Hoteliers and B&B owners suspect this move is part of a long-established campaign by the biggest online travel agent to pressure accommodation owners to offer no deposit bookings, with no cancellation fees.
One B&B owner in the Cotswolds summed up the dilemma: “If we decide to go with no deposit, we are placed with a very real cash flow disadvantage, particularly in leaner periods.
“If we go with their [Booking’s] one night or 50% of total [permitted alternatives], we will probably suffer a very marked downturn in bookings. What next: compulsory free cancellation?”
Changing the terms of business so drastically in such a high-handed way is a demonstration of Booking’s dominant power in our industry and, sadly, of Booking’s attitude to those it calls ‘partners’.
The Bed & Breakfast Association has already referred this bombshell from Booking to the Competition and Markets Authority (CMA) as an anti-competitive and unfair business practice, and as further evidence of Booking’s dominance in the UK accommodation-booking marketplace.
This is relevant to the CMA’s ongoing monitoring of the market in respect of issues such as “price parity” restrictions (what the CMA calls ‘narrow MFNs’) imposed by OTAs on hotels and B&Bs, and on “brandjacking” – that is, where an OTA forces agreement from hoteliers (by bundling it within their terms and conditions) to the OTA bidding on the hotel’s own name on search engines.
Those two issues were two of the five that the B&B Association raised formal complaints about to the CMA in July 2017. The CMA has so far taken some action on the other complaints – on misleading marketing, fake discounts etc. – and we will continue to press for action on ‘price parity’ restrictions and on search engine bidding on property names without separate express permission.
Why? Because those practices distort the market and have given the biggest OTAs more power than they would ever have achieved by marketing alone.
If Booking was not such a dominant player in our sector, the industry’s arguments on these issues would be weaker. But Booking’s unilateral actions like this one prove the real power this tech giant wields over thousands of hotels, guesthouses and B&Bs.
This excess power has resulted in tens of millions of pounds being extracted from consumers and small businesses to inflate the value of the US tech giants at the expense of those who pay for accommodation here in the UK and those who provide it.
We call on the CMA to recognise that and to take action to shift the balance of power back from the tech giants to the real risk-takers, employers and service providers: the hotels, B&Bs and guesthouses that are the backbone of British hospitality.
David Weston is chairman of the Bed & Breakfast Association