TravelBiz Monitor

In Conversation

Friday, 08 February, 2019, 11 : 13 AM [IST]
‘We are confident that hotels will remain united against the OTAs’

The war-cry that hoteliers and their associations at various levels raised against two dominant Online Travel Agents (OTAs) in the country have once again brought to the fore the no-love-lost relationship between two important arms of the travel and tourism business in the country. The boycott call of OTAs started from Gujarat capital, Ahmedabad on December 1 spread rapidly to other cities and States in the country. To understand the issue and the current imbroglio, P Krishna Kumar spoke to Gurbaxish Singh Kohli, Vice President of FHRAI President of FHRAI

Q FHRAI and its affiliates are currently running a campaign against MMT-Goibibo, and OYO. What are the key issues you want to settle through this boycott campaign?
The FHRAI has voiced out the grievances brought to notice by its members, including the city and regional Associations. These are as follows: -
Distortion of market price: It is a matter of fact that the OTAs secure competitive or discounted rates from hotels in order to sell the same on their platform. However, it is also well known that the OTAs further discount it over and above the listed prices offered by hotels without consent, thereby causing loss of image to the hotel and distorts the market scenario. It is also well known that the use of disparity clause (in rates) is one-sided i.e. hotels cannot discount their own tariffs but the OTAs are clearly breaching the same clause for market cannibalization.

Exorbitant commissions: It has been reported by several hotels that the commission charged by the OTAs range from 20 – 40 per cent, thereby adversely affecting the revenues, business and livelihood of the hotel owners.

Hosting of illegal and unlicensed B&B, Motels or accommodations: It has come to our notice that
more than 40 per cent of the room inventory available on the OTA platforms are illegally operated without valid licences from either the local or State authorities. Such kind of hosting is against the spirit of a level playing field by pitting the organized sector into a disadvantageous position and is a huge loss to the exchequer.

Q What is the reason for picking these two entities and taking a strong stand against them? What is your stand on other online players in the same domain?
GoIbibo and MakeMyTrip are the two online entities that have been tweaking and distorting the market prices for quite some time now. While we are in favour of tourists benefitting from any kind of convenience provided by agents, whether online or offline, it should not come at the cost of loss to a hotel. With Go-MMT, it is clear that their ulterior motive is to capture the bigger share of the online marketplace irrespective of what its consequence is to hotels. They try to pit one hotel against its neighbouring hotel by disguising it under jargons like ‘dynamic pricing’.

Q How united is the hotel industry on the boycott call considering your repeated concern of OTAs trying to divide the industry by approaching the individual hoteliers?
The FHRAI approached the OTAs only after having received repeated complaints from hotels. So, we wrote to them, twice by now, and we are still hoping that the OTAs accept our invitation to hold talks. After our first attempt at amicably resolving the crisis, we realised through many of our hotels that the OTAs approached them directly for negotiating.

The fact that the hotels in turn approached us instead of taking the deal offered to them, tells us that hotels want to resolve the issue at its root. Over 30 hotel Associations from several regions in the country have aligned with the FHRAI on this front and we are confident that hotels will remain united against the OTAs. Other

than these two OTAs, there are OTAs who are practicing business ethically and hotels will continue to receive bookings from them. In our latest letter to Go-MMT, we have asked them to refrain from approaching individual hotels and again requested them to hold talks with us.

Q What are the options available before the Associations when both OYO and MMT have refused to engage you after the initial talks saying their contracts are with individual hoteliers and not with the Association?
We have stepped in at the instance of our members and the fraternity at large whom we represent as their apex body and their voice. It is clear to us that Go-MMT would like to avoid talking to us and salvage the situation by mending things directly with the hotels and play the divide and rule game.

Unfortunately, for them, once bitten twice shy, hotels are not willing to negotiate with them directly.

Q There were news reports that the government is mulling regulatory guidelines for e-tailers as a whole in the country. What are your expectations from that move?
Like many experts in the domain have suggested while a regulatory guideline may be necessary for keeping a check on the e-tailing business, it may also lead to creating an intrusive atmosphere in conducting business. While the Government can ensure that goods or product cannot be sold for a higher price than the MRP, there is no way that any Government agency can ask e-tailers to not discount the price. There is a thin line between asking the Government to interject in this regard and asking them to create a policy framework. The Government with the help of the stakeholders can draw guidelines to curb the monopolistic intentions and overtures by these OTAs.