Online Bookings: Yes, a rather long read, but one needs the detail to understand a still compounding problem in the travel industry…
Peter Needham and others report…
This is not a great time to be a robot. Major online travel agencies (OTAs), largely backed by algorithms and robotics, have seen their share prices hammered by anxious investors – and an influential American travel commentator has told his audience: “Don’t be afraid to call a travel agent”, meaning a human one.
Shares in US-based Priceline Group dived 13.5% last week. The group owns and operates travel fare aggregators and travel fare metasearch engines including Booking.com, Priceline.com, Agoda.com, Kayak.com, Cheapflights, Rentalcars.com, Momondo, and OpenTable. Meanwhile, shares of TripAdvisor fell 23% and Expedia’s shares dipped by 2.74%. While the Expedia fall was not great, Reuters pointed out that Expedia’s share price had plunged 19% in the past three weeks (since 26 October 2017) – when the company reported weaker third-quarter results than markets had expected.
So what has sent the OTAs flying into rougher weather? Fiercer competition from sharing economy sites like Airbnb and hotel booking sites are among the causes cited. Some hotel chains’ own sites are refusing to be beaten on price. In Europe, OTAs are still trying to recover from the reputational damage caused by a European Commission (EC) survey of online travel booking earlier this year, which found two out of every three sites displayed misleading prices. The European review, deriving from one of the most comprehensive sweeps of travel websites ever undertaken, found online travel sites to be disturbingly unreliable and untrustworthy, with one third giving a final price which was not the same as the first price shown.
Here is an example as to why the likes of Trip Advisor are loosing the confidence of investors. It has been well known, for many years, that Trip Advisor has and continues to be, open to abuse. You can hire I.T groups, usually based in more unregulated lands, to write positive, or negative reviews about your business.
Australia’s Federal Court has found that Meriton Property Services Pty Ltd, trading as ‘Meriton Serviced Apartments’ (Meriton), engaged in misleading or deceptive conduct in connection with the posting of reviews of its properties on the TripAdvisor website.
The Court found that from November 2014 to October 2015, Meriton engaged in misleading or deceptive conduct by taking steps to prevent guests it suspected would give an unfavourable review from receiving TripAdvisor’s ‘Review Express’ prompt email. Meriton did so by:
•inserting additional letters into guests’ email addresses provided to TripAdvisor so that the prompt email never reached the guest, or
•not sending guest email addresses to TripAdvisor.
“The Court found that Meriton, at the direction of management, deliberately implemented a strategy to minimise the number of negative reviews its guests posted on TripAdvisor,” ACCC Commissioner Sarah Court said, “In reducing the chances of a customer posting a negative review, Meriton created a more positive or favourable impression of the quality or amenity of the Meriton properties on the TripAdvisor website.” “Many consumers base their purchasing decisions on reviews they get through sites like TripAdvisor. It’s therefore vital the reviews on these review sites are not manipulated and accurately reflect all customers’ opinions – the good and the bad,” Ms Court said.
The Court found that on several occasions Meriton engaged in this conduct in respect of the majority of guests staying at one of its hotels during periods when there were infrastructure or service problems, such as no hot water or a lift not working. The Court also held that Meriton’s conduct was liable to mislead the public as to the nature, characteristics and suitability of purpose of its accommodation services.
“This decision sends a strong message that businesses must not undermine the integrity of third party review processes in order to mislead or deceive consumers, as this conduct risks breaching the Australian Consumer Law,” Ms Court said. A hearing on relief against Meriton will be held on a date fixed by the Court. It’s noteworthy that TripAdvisor offers a service called ‘Review Express’. Participating accommodation providers provide TripAdvisor with email addresses of recent customers who have consented to their details being passed on. TripAdvisor then emails the customers, prompting them to submit a review of their recent experience with that business.
Meriton offers accommodation under the brand Meriton Serviced Apartments. During the relevant period, Meriton offered serviced apartment accommodation in at least 13 properties in New South Wales and Queensland. Meriton is part of the Meriton Group of companies. TripAdvisor operates a website in Australia which provides free online reviews of accommodation services and other travel-related content generated by travellers. TripAdvisor states that accommodation providers that regularly use the ‘Review Express’ service see an uplift of 28% to 33% in TripAdvisor reviews for their properties.
On 24 November 2016, the ACCC instituted proceedings against Meriton alleging that Meriton engaged in misleading or deceptive conduct in connection with the posting of reviews of its properties on the TripAdvisor website.