Stop illegal discounts, hoteliers warn

SME Times News Bureau | 05 Dec, 2018
The Federation of Hotel and Restaurant Associations of India (FHRAI) on Wednesday accused two major online travel aggregators (OTA) of allegedly offering illegal discounts that are harmful to hoteliers and customers.

Following many complaints from its members, the FHRAI has alleged that MakeMyTrip and GoIbibo managements were adopting unethical and exploitative business practices, divisive-led predatory pricing and other market distortions.

"The biggest industry concern is that after securing discounted rates from a hotel, the OTAs further discount it on their online platforms without our consent. This damages our reputation and distorts the market scenario," said FHRAI Vice President and Hotel and Restaurant Association of India Western India President G.S. Kohli.

Accusing the OTAs of ‘market cannibalization', Kohli pointed out that they (OTAs) have a clause in their agreement forbidding hotels from discounting their own rates but are themselves free to do so, besides demanding exorbitant commissions, hosting illegal and unlicenced Bed & Breakfast accommodations.

The OTAs commissions range from 18-40 percent, adversely hitting the revenues, business and livelihood of the hotel industry, he added.

Besides these high commissions charges to the hotels, the OTAs offer big discounts from their own end, rendering the hotels helpless and compelled to conduct business in a self-defeating atmosphere.

"An immediate solution to the issues that threaten our livelihood, investments and businesses is extremely necessary and call for an active dialogue with the OTAs," said FHRAI Joint Secretary Venkada Subbu.