Double standard and hypocrisy by Booking and Expedia
Christian Ljungstr?m ?
Competition Insights Specialist - Transaction environmentalist / Looking for a job as analyst
The Danish hotel OTA Nustay had a dispute with Expedia and Booking.com, and some hotels. And as a consequence, Nustay went bankrupt.
Nustay was managed from Copenhagen by some former Momondo (flight-meta OTA) employees. Nustay business model regarding hotels was similar to how flight-centric OTAs act. Connect to as many suppliers as possible to get as much inventory from as many different price points as possible, and then sell below the net price, then earn money on commissions/revenue share. I believe Nustay's business model was to use parts of the commission that they got from hotel suppliers to undercut their suppliers (for example Expedia and Booking,com). Of course, former Momondo employees must be well aware of flight OTAs selling airline tickets below net prices through flight-meta. Even below the airlines' net prices. That is why flight-meta (Skyscanner, Miomondo, Kayak, etc) has become such a big actor in the flight marketplace.
What was the challenge for Nustay? The Hotel marketspace and Flight marketspace have different dynamics in the ecosystem. Expedia and Booking disallow OTAs using their ínventory and then selling it below the net price. OTAs get a commission of 12,5% (approx) from Expedia and Booking. It's a B2B revenue share model between Expedia/Booking and their vendors. And the hotels pay approximately 20-30% in commission to Expedia and Booking.
The OTAs can't use parts of the commission to go below Expedia and Booking.com although Expedia and Booking.com do it themselves. Expedia Rewards loyalty program (see link) and Booking Genius (see link). Booking also provides a "free" airport taxi to and from accommodation at selected destinations and hotels. That is an indirect way of undercut net prices given to their B2B OTA customers (except white label).
Expedia and Booking also misuse group bookings to get better prices and terms. (see link).
Expedia and Booking like price parity if it happens on their terms. Expedia and Booking have fares that they don't provide their vendors (at not least for all vendors). For example app fares or free taxis to and from the hotel, membership rates (free and increases the more nights the guest stays), and much more. So Expedia and Booking use their vendors to out-compete them (at least many of their B2B vendors). Expedia and Booking use them for the moment (as long they need them) - but in the future, they might not need many of them. Expedia and Booking will outrival some/many of their vendors. That is just priceless.
I think it is weak and bad when a stronger party (Expedia and Booking) takes advantage of a weaker party (Nustay). Then Expedia and Booking use those hotels as a defense, to then deceive them (the hotels).
"Competition brings out the best in products and the worst in people" - David Sanoff
"Necessity is the mother of invention" - Plato
Expedia and Booking.com must have sneaked to the hotels about Nustay and then used them to crush Nustay (when Expedia and Booking themself use similar methods as Nustay) to be able to indirectly control the independent hotels - that is a double standard and hypocrisy. And in that what also big hotel chains. That is just priceless. It sounds far-fetched that hotels in Australia know a hotel distribution start-up in Denmark unless somebody snitched on Nustay.
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This is insane, Expedia and Booking blocked Nustay to be able to do a similar thing as Nustay did/do. And then use the hotels to complain about Nustay to make Nustay bankrupt - Booking and Expedia misused their strong marketing position and duopoly in accommodation.
What was the problem with Nustay for Booking.com and Expedia? Nustay was owned by one of the richest guys in Denmark. And the EU commission is tired of big tech companies misusing their monopolistic position.
Nustay got unpleased at Expedia and Booking.com and contacted European Union Commission. And the Head of Competition in the EU is also Danish. But that shouldn't matter.
Nustay went bankrupt due to this double standard and hypocrisy by Expedia and Booking. This could be a troubling circumstance now when Booking Holding wants to acquire Etraveli (see link). Even if it isn't so related to the disagreement between Booking/Expedia and Nustay. But it is not impossible that the European Union Commission started counting all complaints, even if they aren't so related.
Some articles about the dispute between Booking/Expedia and Nustay
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All of the distribution woes described here are due to the lack of rate parity enforced by the hotels themselves. OTAs that sell below publicly available BAR or even below net hotel rates should not even exist. European hotels did themselves a disservice by abolishing rate parity, which helps, not hurts hotels. Mind you, the OTA clauses for rate parity refer only to publicly available rates, not for gated rates like loyalty programs, reward programs or guest appreciation programs. So, rate parity does not apply to gated communities like Expedia Rewards or Booking’s Genius, but so is the case with the property’s reward or guest appreciation program. Yet, less than 10% of independents have one.
Architect | Tech Due Diligence Expert | AI Solutions Architect | Innovation Consultant
1 年Oh, you see the problem is that Nustay broke TOS while Expedia and Booking are using dirty tricks *with* supported by the major distribution players. It's not only supported but there are products, you wont hear about, centered around all the dark magic... It's a bit like a small time drug dealer realizing he stepped into a gang territory that has every cop in town corrupted.