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AHLA: $5.2 Billion Spent in Fraudulent and Misleading Hotel Bookings

WASHINGTON—New research from the American Hotel & Lodging Association (AHLA) suggests that online booking scams and fraudulent and misleading travel websites and companies continue to mislead and confuse consumers. To combat this, AHLA is encouraging consumers to “avoid shady deals” by searching smarter for their hotel stays through the launch of their “Search Smarter” education and awareness campaign this summer.

In a new survey commissioned by AHLA, in partnership with Morning Consult, 23% of consumers report being misled by third-party traveler resellers on the phone or online—translating to 28.5 million hotel stays and $5.2 billion in fraudulent and misleading hotel booking transactions in 2017.

These third-party travel resellers use a variety of marketing tactics to mimic hotel websites and call centers but are not, in fact, affiliated with the hotel. These fraudulent and misleading transactions can cost consumers time and money, resulting in lost reservations and additional fees.

With 39% of travelers reporting that they most often book their hotel rooms through a third-party website, AHLA urges consumers to be cautious when booking travel.

“It’s easy and convenient to make travel arrangements online,” said Katherine Lugar, president/CEO of AHLA. “Unfortunately, as online bookings have surged, so too have scams and deceptive behaviors. That’s why we encourage consumers to look before you book, slow down and search smarter. Taking a few extra seconds to book directly with a hotel or a trusted travel agent can save time and money in the long run, and lead to a better travel experience overall.”

Among the 23% of consumers who say they have been misled by third-party traveler resellers, 46% say they were charged extra fees on their credit card; 34% had their reservation lost and had to book another room, losing the cost of their original reservation; and 44% made a special room request that was not relayed to the hotel.

In December, the Federal Trade Commission settled a federal lawsuit with Reservation Counter LLC, a third-party hotel booking reseller accused of using call centers and websites to mislead consumers into believing they were booking, and speaking, directly with a hotel. Reservation Counter also did not disclose that a traveler’s credit card would be charged immediately instead of upon check-in. The settlement resulted in Reservation Counter no longer being able to mislead consumers through these types of practices. Seven in 10 (70%) survey respondents support the FTC’s enforcement action against Reservation Counter. Seventy-two percent believe the government should make it a higher priority to enforce consumer protection laws against third-party hotel resellers.

“We applaud the Federal Trade Commission for issuing an enforcement action against Reservation Counter,” said Lugar. “Unfortunately, the fact that nearly one in four consumers report being misled by third-party resellers—and the constant flow of new companies entering the online travel market—suggests we need to do more to protect consumers. That’s why we are asking Congress to pass the Stop Online Booking Scams Act, a bill that would protect consumers by increasing the transparency and security of the online booking process.”

To reach consumers booking their travel online, AHLA will be launching an online campaign featuring educational materials and video. AHLA will also be hosting an educational day on Capitol Hill where staff will learn about misleading marketing tactics and fraudulent third-party travel resellers and the benefits of booking direct.

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