Are obscurities in local advertising regulations affecting your direct revenue opportunities?

Picture of Alice Heath

Alice Heath

Content Specialist

Are obscurities in local advertising regulations affecting your direct revenue opportunities?

It's not uncommon to find OTAs bidding on meta sites with a lower rate than the brand bid. We have observed that often when OTAs bid on meta sites, they are better setup to capitalise on the complexities of regional advertising standards for presenting taxes and rates, causing perceived disparity, despite often being on-parity on their site. This not only impacts your direct revenue opportunities as your brand bid will appear uncompetitive, but also can be damaging to relationships you have with other partners OTAs who may see your rates cheaper elsewhere. There is also an underlying risk that when your guests are directed to the OTA site, it leaves the door open to your competition who are also present on the OTA’s website.

 

The complexities and obscurities of advertising standards

 

The main challenge here is that advertising standards can vary in different countries. In some regions, there is often no clear legal obligation to show rates inclusive of taxes, or at what point of the booking journey it must be shown. For example in Australia and New Zealand prices must be quoted inclusive of taxes or explicitly state ‘plus tax’, however in the USA and Canada the base rate will be highlighted more prominently, showing the price exclusive of tax and fees, which are often not shown until the checkout point.

 

These complexities and obscurities in advertising standards legislation all over the world can make it easy for some OTAs to get around including taxes on their displayed rates. Large or local OTAs will often have the technological capability to customise how prices are displayed to meet regional advertising standards of different points of sale. In Israel, for example, the tax issue in hospitality is complex, since only domestic travellers pay 17% VAT. By law, every price presented in Israel must include all the taxes, without any hidden costs, however since OTAs claim most of their target market are international tourists they may show rates exclusive of VAT on their sites as well as on Meta sites.

 

The difference with hotels is that they usually don’t have the technology or resources to ensure rates displayed in different countries match their regional advertising standards legislation. As a result, its common for them send the rates to meta sites inclusive of taxes, and therefore appear to have higher prices on meta, as even though an OTA price may be on-parity, due to the way it is displayed, it can create a perceived disparity.

 

Price Transparency - How transparent are OTA rates?

 

We did a quick search to demonstrate the issue:

 

Expedia Group on TripAdvisor: Delano Hotel, Las Vegas

 

 

 

  
Image 1.

 

If you refer to image 1. you can see the Expedia bid on Tripadvisor is £83 whereas brand.com bid is £114. This major disparity would inevitably drive traffic to Expedia over brand.com.

 

 Image 2.

 

After clicking the Expedia deal we are directed to the Expedia site, where the displayed rate remains at £83, with small text underneath detailing an additional cost of $41.95 due at the hotel (see image 2.)

 

 Image 3.

 

The next step takes us to the reservation page, where it explains the additional cost is for the resort fee (see image 3.). Using google conversion we converted £83 to dollars which on the day worked out as $111.84. After adding the ‘resort cost’ we are left with a total cost for the room as $153.79 or £114.14, a considerable difference to the original £83 seen on TripAdvisor, and interestingly matches the original hotel bid. So while Expedia in this case was not actually out of parity on their brand site, they are more likely to convert the traffic and the chances of them securing the booking is high.

 

Taking action

 

To achieve a higher rate integrity, it's important to see it from the guests’ perspective. In situations where there is a ‘perceived disparity’ due to OTAs offering a lower price, regardless of the final booking price, the guest is less likely to book direct. In cases where the bid is lower by an amount equivalent to applicable taxes, it can indicate that the OTA may be taking advantage of, or be non-compliant with, the MSE’s policy or regional advertising standards. When you come across such cases, here are some recommended steps to take:

 

  1. Check the regional advertising standards requirements or MSE policy: If the OTA is compliant, it may be that you may want to review how your own prices are displayed. If they are breaking the rules, you can consider other actions.

  2. Assess the importance of the PoS: Before taking further action, consider how important this Point of Sale is, to prioritise your effort. If the PoS is strategic for your growth, or a key traveller market segment, then it may be of value to invest some effort. If it is not, you may want to review if it is a battle worth fighting.

  3. Make your bids or rates more competitive: If the OTA is compliant, then you are perhaps missing out on an opportunity to win some direct business. Review how you are sending your rates and bids, as well as how you are displaying the rates on your brand.com. If you can fix this, it will remove the perceived disparity and pave the way to realising an increased direct bookings from that PoS.

  4. If this is a contracted OTA: Get in touch with your account manager of the contracted OTA, and ask for them to resolve the issue and get on parity by sending them screenshots for proof. This should typically get fixed quickly and get your Meta Search bids back on parity with your contracted OTA.

  5. If this is an un-contracted OTA: They are likely sourcing the inventory from one of your wholesalers. Carry out a test booking to help trace the wholesaler quickly. Once you know which wholesaler is breaking terms, you can contact them with the evidence and take action.

  6. Report the issue to the Meta Search Partner: Take a screenshot and share this with the Meta Search Partner and demand that they resolve this. Meta Search Sites such as TripAdvisor will have strict policies on receiving the correct prices from their partners. Moreover, if a partner fails to comply they can be blacklisted from bidding.

  7. If this continues despite previous steps, then take the evidence and contact the regional Advertising Standards Agency. If they deem that the OTA arenot compliant with their laws on how prices should be advertised, and they may be able to step in and enforce the law accordingly.

 

Monitoring your Rate Integrity regularly will help uncover issues such as this and when they occur, especially at different points of sale. Are you already using our Distribution Intelligence solution? Monitor your Rate Integrity Score on a daily/weekly basis to find out when your revenue strategy is at risk, and use the evidence available to act quickly. If you aren’t but would like more information, get in contact with sales@fornova.com.