Almost a quarter of US consumers report being misled by third-party travel resellers, amounting to USD5.7 billion in annual ‘fraudulent and misleading’ hotel booking transactions

8 October, 2019

New research from the American Hotel & Lodging Association (AHLA) suggests that almost one in four (23%) US consumers report they have been misled by third-party traveller resellers either on the phone or online, which amounted to USD5.7 billion in fraudulent and misleading hotel booking transactions in last year alone.

"The numbers we saw in this research are completely unacceptable. Consumers are being robbed of billions of dollars every year by bad actors," says Chip Rogers, president and CEO of AHLA, the only national association representing all segments of the US lodging industry.

The research highlights that online booking scams via third-party websites that mimic hotel websites, call centres not affiliated with hotels, and deceptive advertising and dishonest marketing practices by travel websites continue to deceive and confuse consumers. Last year AHLA estimated the cost of these 'fraudulent and misleading' transactions at USD5.2 billion, representing a +9.6% increase.

The research found that when booking a hotel reservation through a third party, one in four consumers experienced a problem with their reservation; consumers almost universally (94%) believe they should know who they are doing business with online when booking a hotel room with two in five (40%) upset to learn that comparison sites may be misleading them due to their penetration of the online travel market.

More than three-quarters (77%) of consumers agreed the government should make it a higher priority to enforce consumer protection laws against third party hotel resellers. AHLA itself is encouraging consumers to 'Search Smarter', a campaign aimed at helping travellers avoid lost reservations, additional fees, and potentially ruined travel bookings.

The transparency campaign encourages consumers to book smart by booking directly with hotels or trusted travel agents, taking their time in the booking process and not being pressured by misleading advertising or deceived by fraudulent websites.

"Our focus in the hospitality industry is to make sure guests have a smooth, stress-free experience, from booking the room to checking out after their stay. We recommend consumers look before they book, take advantage of loyalty programs and book directly with the hotel or a trusted travel agent" explains Mr Rogers.

The US hospitality industry supports 8.3 million American jobs. With nearly USD660 billion in economic output and USD186 billion in federal, state, and local taxes, the industry is a vital economic contributor in communities across the country. The lodging industry continues on a strong growth trajectory, with sales up 43.5% since 2010 and 1.3 billion guests staying in US hotels each year.

"Hotels make dreams come true every day - not just for our guests, but the 1 in 25 Americans whose jobs we support," says Mr Rogers. "Hotels in every congressional district are vital to the strength of communities and a major driver of the economy."

The US is not alone in facing such issues as they are prevalent across the world. Earlier this year, hotel booking sites were forced to make major changes after Britain's competition watchdog found they routinely engaged in pressure selling, misled consumers over prices and gave more prominence to hotels that paid the most commission.

The UK Competition and Markets Authority has clamped down on online practices that give a false impression of a hotel's popularity, with claims such as "one room left at this price" and "booked four times in the last 24 hours" as they prevent customers finding the best deals and ultimately breaches consumer law.