Industry NewsStudy: Hotel Booking Scams Cost Consumers $5.2 Billion in 2017

Study: Hotel Booking Scams Cost Consumers $5.2 Billion in 2017

Washington, D.C.–As Americans begin gearing up for the busy summer travel season, 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 counter this issue, AHLA has launched its summer “Search Smarter” education and awareness campaign to encourage consumers to “Avoid Shady Deals and Have a Sunny Stay” when searching and booking hotel stays.

In a new survey commissioned by AHLA and conducted by Morning Consult, 23 percent 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 booking scams can cost consumers time and money, resulting in lost reservations and additional fees.

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

“It’s easy and convenient to make travel arrangements online. Unfortunately, as online bookings have surged, so too have scams and deceptive behaviors,” Katherine Lugar, president and CEO of AHLA, says. “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 percent of consumers who say they have been misled by third-party traveler resellers, 46 percent say they were charged extra fees on their credit card; 34 percent had their reservation lost and had to book another room, losing the cost of their original reservation; and 44 percent made a special room request that was not relayed to the hotel.


Ending Online Booking Scams

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. The new research shows that 70 percent of 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,” Lugar says. “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.

AHLA is encouraging consumers who book travel online to book directly through the hotel website or mobile app to avoid booking scams. AHLA’s national partner, the Better Business Bureau (BBB), also offers tips to educate consumers on how to avoid costly and painful scams when booking hotels online.