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Comment by avar | Hacker News Reader

AirBnB clearly uses low room rates and high service fees to pull you in, but there's a legitimate reason to display it like that.

The cleaning fee is fixed. So maybe you start out thinking you'll stay 5 days, but end up staying 10. If they showed "all inclusive" rates you'd have confusion in the other direction. What you thought was the cheap hotel suddenly isn't because the cleaning fee for the two is very different.

Similarly, it's important to display the local taxes separately, because some customers may be e.g. entitled to a rebate for that part (some localities e.g. only charge foreigners).

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>Similarly, it's important to display the local taxes separately, because some customers may be e.g. entitled to a rebate for that part (some localities e.g. only charge foreigners).

Yeah, and we can come up with a story of why a hefty AirBnB fee should be hidden until the last moment as well.

Or we can notice that 99.99% of AirBnB users aren't going to have their taxes and fees rebated, and would be better off seeing the total price right away.

Yes, including the cleaning fee.

The users enter specific days anyway. The rate changes depending on which days those are. You can't infer the price for another date range without getting a quote specifically for that date range anyway. Separating the cleaning fee out achieves nothing.

The legitimate reason is that momentum causes even frustrated and annoyed people to finish most transactions even after they realize that AirBNB has tricked them about the price. Let's not pretend there's something nobler then that.

The whole travel industry is chock full of this bullshit where vendors hide the full price (taxes, resort fees, etc.). It sucks.

Working for an OTA for the last 5 years I can confirm this. Also, stay away from travel insurance, cancellation protection, or whatever else they call it. It's a scam.

And yes, as a previous user stated, it's very easy for us developers to include the fees and taxes in the average rate display. Fees are either fixed dollar amounts or a percentage of the room charge. It's trivial to add this into the average rate per night. Our corporate overlords instruct/force us not to.

Furthermore, my advice is to avoid the major OTAs such as Expedia. First, they engage in price-fixing. Hotels are not allowed to display prices cheaper than they appear in Expedia, otherwise they are threatened with delisting. Expedia calls this their "rate parity" policy. They should be taken to court by the DOJ. Second, they take a massive percentage from hotels as commission. Use Expedia to find availability, but then go direct to the hotel. Also, because hotels know they are getting absolutely FUCKED by Expedia. They will not put inventory on Expedia during peak seasons. They know they can get max occupancy without being charged a 30% by Expedia. Ski resort hotels are a prime example, but there are several other cases. In short fuck Expedia and probably AirBnB too.

Just google "expedia price fixing" and the list goes on, here is the most recent one: https://www.claimsjournal.com/news/national/2019/05/09/29082...

I work for another OTA, opinions are my own.

Rate parity isn't price fixing, and it's been going on for decades (pre-dates the Internet). The DOJ and EU regulators know about it.

The hotel can price rooms however they want, they then enter into a voluntary contract with an OTA to give them a percent.

If hotels could just consistently give consumers OTA prices minus that percentage directly customers would get savvy to that, and the legitimate service an OTA provides wouldn't be paid for.

It would just lead to shadier forms of advertising for the same service, like the OTA obscuring the name, location etc. of the hotel.

Maybe that'll happen, and maybe we'll be better off as a society. It'll impact a lot more than just OTA's, e.g. Google Adwords displaying a product for $100 when part of that margin is being given to Google.

> Second, they take a massive percentage from hotels as commission. Use Expedia to find availability, but then go direct to the hotel[...]

30% is very high, but if the hotel is voluntarily paying a 30% rate on advertisement that's how much it's worth to them.

Whether that's "fair" or not it's generally a bad deal for the consumer to book directly at the same rate, if something goes sideways they don't have the OTA's bargaining power to help them out.

> They will not put inventory on Expedia during peak seasons.

Good for them, but it seems 30% is worth it in the off-season if they go out of their way to sign-up to pay that.

> In short fuck Expedia and probably AirBnB too.

A hotel that's willing to pay Expedia 30% on X for ads isn't going to be better off with no X at all, which unless they're idiots is the alternative.

You're basically saying "fuck advertisement". Sellers stand to gain from advertising their services to buyers, that's why advertising exists.

"Voluntary" give me a break. Do you actually believe what you're typing? If so, that is an impressive spell you've placed yourself under. The large OTAs have such a large share of the market that there is nothing voluntary about using them. It's list your hotel with us or go out of business. And when you have that clout, you can then say, and don't try listing prices on your website that are lower than ours or we will de-list you.

Explain how that is not price-fixing at worst, and not shady at best?

I didn't mean to ignore this, I just wasn't following the thread, and perhaps you won't see this reply.

I'm not maintaining that the current status quo is optimal, just that it's more complex than what people traditionally think of as price fixing, which e.g. would be all the gas stations in your area deciding to charge you the same for gas via explicit collusion.

Speaking more generally, the travel industry as a whole has always and probably always will spend a relatively large amount of advertising of some sort. Most of the industry is hoping to lure travelers with no local knowledge to their properties or services, and they're competing with other local properties.

Before OTAs hotels might expect to pay this advertising fee to travel agencies, or to pay to be part of a hotel chain as a guaranteed source of customers.

The unstated desire of people opposed to rate parity is to somehow have their cake and eat it too.

After all, if almost nobody looked at these OTA websites why care about it? It's not going to have much of a financial impact.

But they do care, because OTA's are a major source of revenue. And why is that? Because people get a lot of value from those sorts of market intermediaries, not just in the accommodation business, but in the form of major chain stores, Amazon, eBay etc. It's easier to compare products when you have a standardized comparison run by an intermediary.

As far as I can tell the scenario hotels hoping for the end of rate parity want is one where consumers might browse OTA websites, but be savvy enough to just visit the hotel's website directly to make a booking.

I don't see how that's going to be sustainable, you'd essentially have advertising with a free rider problem. Ending it wouldn't be the end of the world, but I don't see how we wouldn't just end up in some new equilibrium where accommodations wouldn't just pay a similar amount of money for advertising via some other means.

It's not like browsing organic Google results for hotels is some arcane wizardry, or visiting a town's listing of hotels (which the hotels generally don't pay for or get at really good rates) isn't known to people.

Yes these lingering discussions tend to get buried. I'm actually surprised you responded given the nature of HN. I'm surprised I decided to check my comment history as well.

We disagree. I view rate parity as a form of price-fixing. I don't doubt the value OTAs provide to the consumer, but their value isn't sufficient enough to stand on its own without price fixing. Expedia knows this, and therefor uses its market position to fix prices and thus maintain is position. When challenged, which it has been numerous times, its legal team has been effective in arguing their point. I can't deny that. Perhaps my view is overly simplistic. I view someone telling me, if you want to sell your product on my site you have to sell it for the same price everywhere as price-fixing. Yes, its voluntary, but in practical terms its not because the hotel cannot survive without the OTAs. I won't weep too many tears, because the hotels could use their sufficient capital to address the problem. But, lets at least call a spade a spade here. If it looks, walks, and quacks. Well...

You brought up Amazon as an example of market indermediaries, otherwise known as middlemen. Are they engaging in price-fixing? What about ebay, are they engaging in price fixing? I'm actually interested if we can find a similar example to what OTAs do in another industry. I don't think we can.

The product I work on has a search experience similar to Airbnb's. We initially made the choice to show all-in prices on the initial search screens. Bookings TANKED. Guests called in to complain why our listings are "more expensive on our own site than Airbnb" (they were cheaper at the end of the day, but we weren't hiding fees).

End of the day, we had to switch to Airbnb's fee-hiding style because users are trained to expect the hidden fees.

AirBnb employs all sorts of clever people.

It’s pretty easy to show an average rate that incorporates the various fees and make the detail available later.

A junior-level developer could do this. You don't need any serious brainpower to pull this off. They have all the pricing already. They omit the fees purposefully.

Source: I've worked as a Sr. Engineer at an OTA for the last 5 years.

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