“We offer the Best
rates of the Day on our branded website”. How often have we heard this marketing line from
hotels worldwide especially the ones belonging to International chains. It’s a good gimmick and hotels are even managing to ensure that their
published or the much abused Best Rate of the Day (BAR Rates) are the cheapest rates in the
market.<
br/>And how do they manage to do this? Initially Hotels started controlling market trends with their published rates. Then they took it a step further and decided to have discounted rates which could change everyday, sometimes to lower levels than special contracted rates with
Travel, Airline and Corporate Partners. Till here the picture was still within ethical business processes, though perhaps sometimes verging on the borderline of conspiracies.
Now came the final crunch. Today, most
Hotel chains are starting to ensure that their published rates are not undercut. In fact, they have been known to insist on a one-way contract guarantee that the price the operator sells to the public under no circumstances should no lower than the hotels advertised price for a day. The penalty for this can be equivalent to having any special rates being revoked or worse, the business partner being banned forever by the hotel. An uncomfortable scenario for Travel and Airline partners, to say the least but what surprises me even more is that nobody is asking ‘is this kosher business practice?’. Do these agreements constitute price fixing by the hotels. Ask the Travel or Airline partner who does not know what rate to quote to a potential customer for fear that they may unknowingly break this one-way agreement.
Are Travel, Airline and Hotels are so dependent on hotels that they are willing to be blackmailed into unfair pricing vexations? What is the final impact of these pricing strategies on the traveler who has to pay what the hotel is demanding? Why have hotels succeeded in wiping out a concept called fair market play? The implications of these questions are profound and the answers could affect the way the hotel industry organises itself. I know of no other industry which allows such muscling in tactics even if it is clothed in snobbish fineries.
And finally I think we need to ask, Are hotels breaking competition law?
Published: October 27, 2007
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