Google and big international online booking agencies are slowly squeezing independent travel companies out of business
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The big international online tourism booking and event platforms impose pricing parity policies on the venues listed on their sites, not good news for consumers looking for cheaper prices and it stifles marketing innovation among tourist venues and resorts.
This emerged on Friday at the third day of the Competition Commission’s Online Intermediation Platform Market Inquiry.
Reinard du Plessis, general manager of marketing at ATKV, a local camping and resorts company, told the inquiry that the conditions of being listed with the large international travel booking platforms included that the venue needed to ensure its prices and rates were the same across all the online booking agencies that the venue had contracted to list with, although the venue was free to post promotional prices on its own website.
When questioned by the commission how he felt about this policy, Du Plessis said that if it was from his personal point of view, he would want to be in a position to search online for the best possible prices, without knowing that venues had been restricted in their pricing by the online booking platform.
He said from a business standpoint, this restriction prevented venues and resorts from doing their own marketing innovations, especially considering that different online booking platforms served different markets, and “it takes away the opportunity for us to shop around,” said Du Plessis.
He said the Covid-19 pandemic had caused a global slump in tourism, and it had become difficult for venues and resorts to deal with online booking platforms, locally and abroad.
This was because many staff had been retrenched at online booking platform, and for example, if a customer was standing at a reception desk of a hotel with a problem, it was difficult to deal with international booking agencies in other countries, where the solution might only arise in a matter of days.
Paulina Klotzbücher, the managing director of Travelstart, a leading African leading online travel agency, said it was sad that while the internet was originally viewed as a space that could provide an equal playing field for businesses big and small to market their products, in the travel industry, it had instead become prohibitively expensive for small companies to enter the online market.
For example, for South African venues, it was expensive to have to advertise on these sites, while the marketing cost was negligible for foreign companies working in their own currencies.
However, she said, one also could not participate in the industry without the large international online booking agencies and Google, even though all the margin and revenue available to the industry was “being siphoned off to these giant tech companies”.
She said that to give an example of how expensive it had become for the acquisition of marketing space on the free internet, the very big international online booking platform Booking.com paid one third of all its revenue, before the Covid-19 pandemic, to Google so that it could get more bookings.
For independent travel operators, “it’s a struggle to play in the internet space”, said Klotzbücher.
She said that one might question how Google Flights could sometimes offer flights for free, but this was because providing the flight free gave them access to the data for the remainder of the journey of the traveller, and it could provide further services to the traveller such as hotel accommodation.
She said that Google’s response to complaints that it was acting like a monopoly was always that it was acting in the best interests of the consumer, but an economy could not just be built on advertising, and Google was “squeezing out the middle man, more and more”.
“Everybody (in the travel industry) still advertises on Google...but we ignore the issue ...,” she said.
BUSINESS REPORT ONLINE