According to the American Hotel & Lodging Association (AHLA),
online booking scams cost consumers $5.2 billion in 2017.
(Photo courtesy of Shutterstock)
With 500 online hotel bookings happening every minute, technology is transforming the way people book travel — but it's also creating real problems. Travel fraud is on the rise, with one in four consumers being scammed , according to recent research from the American Hotel and Lodging Association (AHLA). The accused? Third-party travel resellers. And shady online marketing practices by these companies have led to 28.5 million fraudulent and misleading hotel bookings — costing consumers a whopping $5.2 billion in 2107 alone.
In December 2017, the Federal Trade Commission settled a lawsuit with a third-party hotel booking reseller called Reservation Counter, LLC, which was accused of using call centers and websites to mislead consumers into believing they were booking — and even speaking — directly with a hotel. But it's not enough. "The constant flow of new companies entering the online travel market suggests we need to do more to protect consumers," says Katherine Lugar, president and CEO of the AHLA.
According to the AHLA's research, the numbers are grim: 23 percent of consumers say they have been misled by third-party travel resellers; 46 percent were charged extra fees on their credit card; 34 percent had their reservation lost and had to book another room, losing the cost of their original reservation; 44 percent made a special room request that was not relayed to the hotel.
We caught up with Lugar, who has been in this role since 2013 and has been a victim of online hotel scams herself. She gave us her tips on some of the most pervasive scams and how to avoid them.
Katherine Lugar, president and CEO of the American Hotel & Lodging Association.
(Photo courtesy of Bill Clark/CQ Roll Call)
The Scam: High-Pressure Tactics
The Solution: Look out for misleading messages. “Book now.” “Three rooms left.” “Other people are looking at this hotel right now.” “Sale ends tonight.” Messages such as these on a third-party travel website could be misleading marketing tactics to pressure travelers to book immediately. Third-party websites are selling a portion of a hotel’s rooms, but they do not have access to their entire inventory. If you’re worried about a particular date filling up, call the hotel directly to get a sense of their availability.
The Scam: Fake Hotel Website
The Solution: Double check the website’s URL. Some third-party booking sites will go so far as to use a hotel’s brand name in the URL. Take an extra minute to make sure you’re on the hotel’s actual website, not a third-party vendor using a hotel’s identity without permission. If you are unsure, call the company. You can always call and ask if the website you are on is the actual hotel or is affiliated with the hotel in any way. You’ll also be able to ensure any special requests are being relayed directly to the hotel.
The Scam: Identity Theft
The Solution: Make sure the site is secure before payment. Double check that the URL has a small lock within the search bar before providing your personal information. The URL should start with https:// with an “s” as opposed to just http:// without an “s.” Booking with a secure website provides an added layer of protection for your credit card and personal information. The absence of a secure connection is also a huge red flag that the company you are booking with may not be legitimate.
The Scam: Sneaky Policies
The Solution: Know and understand the hotel’s cancellation or trip change policy. Always confirm the cancellation or trip-change policy so that you know what you are entitled to if you need to cancel or modify your hotel arrangements. Some third-party websites don’t properly display the cancellation policy and do not provide refunds or allow you to modify your trip after you book your stay. Always confirm those important details before booking your hotel.
The Scam: Lack of Transparency
The Solution: Do your research before booking your hotel online. An online search can help you find the right hotel to meet your needs, and research shows consumers visit 7-10 websites before booking a reservation online. Unfortunately, what many consumers don’t realize is that when they’re searching multiple websites, they’re usually comparing just two companies, Expedia and Booking Holdings. Together, these two companies control 95% of the online travel market. That’s why we encourage you to take an extra minute and look on the hotel’s website. Oftentimes, you’ll find the better value when booking directly with the hotel.
The Scam: Extra Fees
The Solution: Look closely at the breakdown of the total cost of your stay before you pay. Some third-party travel sites will charge you a reservation/booking fee, in addition to the cost of your hotel room.
The Scam: Lost Reservations or Requests
The Solution: Booking through third-party booking sites can result in lost reservations and ruined vacations. Important information or requests may not be relayed to the hotel correctly either. That includes spelling on your name, which can create an issue when you go to check in, or requesting a specific type of room, such as one that is wheelchair-accessible.
The Scam: Unsolicited Phone Calls
The Solution: Be cautious if anyone contacts you unsolicited. They may be a legitimate business, but it’s worth taking the extra time to investigate them if you didn’t seek out the information. Check with the Better Business Bureau for more information about the company, and any unresolved complaints about them.
Lugar also shared this helpful advice:
• Always book direct. Booking directly with the hotel or a trusted travel agent can help ensure you get what you want and need from your reservation and often provides better value.
• Take advantage of loyalty programs. Many hotels offer free benefits through their loyalty programs. Booking directly with a hotel ensures you will get your reward points.
• Celebrating something special? Let the hotel know. Hotels are in the hospitality business, and they love helping create memorable experiences for guests.
• Report it. If you believe you have been scammed, deceived or misled by an online hotel reseller, contact the Federal Trade Commission (FTC) to file a complaint.
Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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