HOTREC: Europe’s Hoteliers Call for Fairer OTA Practices

Photo source: HOTREC

Europe’s hoteliers are calling for the proper implementation of the Digital Markets Act (DMA) to establish fair rules and ensure more balanced treatment by Online Travel Agencies (OTAs).

The DMA was established by the European Union in 2022 and aims to ensure fair competition and regulate the activities of large online platforms, often referred to as “gatekeepers”, by setting clear rules to prevent anti-competitive practices and promote a more open digital market.

The 3 main players within the OTA market remain Booking Holding, Expedia Group and to a lesser extent HRS, with an aggregated market share of 90 percent. Under the DMA, Booking.com is a gatekeeper platform.

According to the 2024 Hotel Distribution Study released by HOTREC, the European association of hotels, restaurants and cafés, over the past 10 years, OTAs like Booking.com gained an average 10 percent market share in the European hotel sector, reaching 71 percent – a fact that highlights their growing influence. Expedia has a market share of close to 15 percent, up 2 percent in the last 2 years. HRS in 2023 had a market share of 4.6 percent.

Among the study’s main findings, while sales channels for European hotels have returned to pre-pandemic trends, direct bookings continue to decrease.

Moreover, it was found that hotels heavily rely on OTAs like Booking.com for distribution and bookings, especially for smaller hotels with fewer rooms.

The graph illustrates that a significant portion of hotels heavily relies on Online Travel Agencies (OTAs) for their distribution mix. 28% of the hotels have OTA market shares ranging from 30% to 49%, while a considerable 20% have market shares exceeding 50%. For smaller hotels with fewer than 20 rooms, which constitute 28% of the sample, the reliance on OTAs is even more pronounced. 27% of these smaller properties have OTA market shares between 30% and 49%, and an equal proportion of 27% generate more than half of their room nights through OTA bookings. These figures highlight the substantial role OTAs play in the distribution strategies of hotels, particularly for smaller establishments with limited resources and reach.

Results in the study for the reference year 2023, based on observations of over 3,000 hotels across Europe, showed that the dependency of hotels on OTAs remains very high.

According to comments from hoteliers:

• Booking.com and Expedia are frequently mentioned for their monopolistic practices.
• OTAs are known for undercutting hotel prices using their marketing budgets, which makes it difficult for hotels to compete directly.
• Issues include unauthorized discounts and promotions by OTAs without hotelier consent.

HOTREC’s president, Alexandros Vassilikos, stressed that hotels in Europe still do not have full control over the sales of their products despite significant efforts and investments in digital transformation.

“We invest to provide the highest possible quality services at the best possible prices. However, many times our efforts are thwarted by tech giants that mediate and arbitrarily determine the terms of sale, to the detriment of consumers, hotels, and especially smaller establishments,” he said.

The association’s president called for a new “balanced relationship” with OTAs, with a special reference to Booking.com, the largest OTA, which is now a gatekeeper platform under the Digital Markets Act (DMA).

According to the DMA, dominant platforms will finally have to comply with the new digital rules, allowing hotels to offer better prices on their own distribution channels.

“It is very important that we managed to compel platforms such as Booking to comply with specific rules. We continue the effort at the European level to implement the DMA firmly and to establish fair digital rules that will guarantee free competition in European hospitality,” Vassilikos said.

Photo source: HOTREC

The sixth study since the series began in 2014, the Hotel Distribution Study was conducted between February and April 2024 in collaboration with the University of Applied Sciences of Western Switzerland Valais.

Released every two years, HOTREC’s study examines recent developments and trends in the European accommodation sector, and uncovers the way consumers book hotel rooms.