Hotels association puts MakeMyTrip, Goibibo on notice; OTAs look to resolve concerns amicably

The Federation of Hotel & Restaurant Associations of India (FHRAI) has written a letter to online travel aggregators (OTAs) MakeMyTrip and Goibibo, warning them of a nationwide protest, if current issues were "not amicably resolved”.

In a statement issued earlier today, the pan-India federation has alleged that these OTAs’ business practices are "exploitative, unethical and divisive leading to predatory pricing and other market distortions, which has a potential to harm both hoteliers and consumers in the long term".

The statement further said that hotels had alleged that "the OTAs charge commission that ranges anywhere between 18 and 40 per cent", and that, “The exorbitant commissions have been adversely impacting revenues, business and the livelihood of hoteliers.”

FHRAI said it had written to the OTAs outlining concerns like “distortion of market price, the demand for exorbitant commissions and the hosting of illegal and unlicensed Bed & Breakfast accommodations”.

S K Jaiswal, Vice President of FHRAI’s North chapter, said in the statement that "more than 40 per cent of the room inventory available on the OTAs is illegally operated".

"The so-called B&Bs are operating without valid licenses from local or state authorities. Since these operators do not have to pay for licences and the statutory fees, they are cheaper by default. This disrupts the spirit of a level playing field by pitting the fly by night operators against the organized sector and is also a huge loss to the exchequer. Not only does this put legit hotels at disadvantage but such indiscriminate hosting encourages illegal activities. Such non-compliance of statutory rules and regulations compromises guest safety and which should be a big concern for everyone involved,” he added.

Reiterating the same, Gurbaxish Singh Kohli, Vice President of FHRAI and President of Hotel and Restaurant Association of Western India (HRAWI), said that one of the biggest concerns is that after securing discounted rates from a hotel, the OTAs further discount it on their online platforms without the hotel’s consent. “Ironically, the OTAs have a clause in their agreement that forbids hotels from discounting their own rates but are themselves free to do so,” added.

FHRAI’s Secretary Venkada Subbu M said that this has rendered hotels helpless, left with no choice but to conduct business in a self-defeating atmosphere and that this needs an immediate resolution. “We feel it is necessary to call for an active engagement and dialogue with the OTAs,” he added.

The Federation said that it has written to MakeMyTrip and Goibibo in the hope that they will understand the ground level situation of hotels and reason through dialogues. “However, based on the previous experience of hoteliers whose attempts at negotiations were neglected by the OTAs, the FHRAI has also forewarned a nationwide protest against the OTA entities,” it added.

The association also said that global player booking.com, which has operations in India, has met FHRAI HRAWI office bearers in a bid to resolve the issue.

MakeMyTrip says 'business as usual'

MakeMyTrip, which acquired Ibibo Group in October 2016, said in the statement shared with YourStory, "We are actively engaged with our partner hotels and are in dialogue with FHRAI as well. We are confident that we will be able to resolve any concern amicably."

The latest development of the notice seems to be happening in the backdrop of reported 270 hotel-owners in Ahmedabad refusing to take bookings from MakeMyTrip and Goibibo', as their protest against heavy commissions they charge and the hefty discounts they offer consumers.

However, according to sources inside MakeMyTrip and Goibibo, there has been trouble brewing with FHRAI for some time now. There have been social media posts, and WhatsApp forwards in groups asking people to not process any hotel or air bookings through MMT or Goibibo. 

Sources suggest that the body is closely monitoring the kind of commissions charged by the aggregators, and claim that FHRAI has been looking at ways to be a part of the transaction. However, it is unsure if the arm-twisting works one way or if the hotels themselves have issues with aggregators.

Sources close to the matter told YourStory that FHRAI is arm-twisting Goibibo and MMT into being a part of the industry body, while the aggregators believe they do not need to be a part of it as they are travel tech platforms.

In its statement, the company "strongly" denied the reports of booking cancellations on its travel platforms – MakeMyTrip and Goibibo – saying, "It is business as usual at India’s leading online travel Group."

MakeMyTrip Co-founder and CEO Rajesh Magow said, “There is misinformation being spread in social media about hotel bookings on MakeMyTrip and Goibibo not being honoured. This information being spread is completely baseless...While we are engaged with few of our partners to resolve the matter amicably, we continue to have hundreds of hotels in Ahmedabad live on our platforms, thereby giving our customers a lot of choice to pick from. We are honouring all bookings on our platform in Ahmedabad, making sure there is no hassle for any single customer who books on MakeMyTrip and Goibibo. We remain committed to providing our customers with the highest level of quality and service.”

(With inputs from Sindhu Kashyap)