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Comment by beefield | Hacker News Reader

One of the most amazing things to me is that a couple of large hotel chains can't come up with a hotel reservation coop that would compete/throw out with bookin.com et al. If you worry about competition, just found two or three competing coops and be member of them all. SEO? If most hotels are nowhere but in the coop platforms, how can google not display them at top?

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This is a really good question with a frustratingly simple answer: OTAs like Booking.com have "rate parity" contracts guaranteeing them equal rates to the hotels' direct booking sites and any other channels they use: https://businessblog.trivago.com/rate-parity-hotel-industry-... - and these have de facto been upheld in the US court system.

So if you're a hotel deciding whether to invest resources into your own branding and marketing, vs. investing it into a brand new coop that itself can't undercut the household-name OTAs that are spending vast amounts of marketing dollars and years of SEO work to make household names, you'll invest in yourself.

Charge a $1/month membership billed annually to the coop site, and offer a $25 rebate to any coop members when they book a room.

Make it very easy to become a member while booking the room... $100/night + $12 coop fee, and after you check-in you get a $25 rebate. The OTAs would still get the $100 price, but hotel would effectively charging $87.

Well, in my opinion rate parity agreements should be illegal in the first place, as they foster rent seeking behaviour as opposed to fair competition.

And if a few large chains drop out of these household names and welcome all small hotels to their coop with fair terms, I fail to see how that would be NPV negative move even if it took a couple of months to readjust for SEO. Price fixing? Just found a couple of competing coops with different seed chains.

This mirrors the clauses VISA/MasterCard have that say that shops can't charge different prices for credit cards and cash which also solidifies rent seeking behavior.

I wonder if you could create a similar law for both.

This one is very frustrating. If anything it should be obligatory to make payment processor fee to be a separate item. This way we would have fair competition with consumers choosing the cheapest/most convenient option.

Airlines such as Ryanair in Europe do this.

One of the regulations that airlines in europe are required to adhere to is that they're not allowed to advertise up-front prices that come with additional non-optional fees. So the ticket price advertised up front has to include all mandatory fees and taxes. Optional fees (hand luggage now being the latest, priority boarding, checked luggage) can be extra.

Payment processor fees cannot be extra. At least one needs to be free. So in reality, it's not necessarily the cheapest processor that's free, but it's the least popular one that's free. That way, for all the common ones, you can now charge a fee and tick the regulatory box, while still screwing your customers out of more money.

E.g. Visa Electron is free, Visa Debit/Credit, Mastercard debit/credit and Amex all come with fees to use.

Funniest is that nowadays card payments are likely cheaper to process for merchants than cash - if you account properly for all costs. So credit card companies should start lobbying to allow different pricing based on payment methods.

If you're a large retailer and have been able to negotiate good rates with a payment processor and are in a country where interchange fees are capped (e.g., EU countries), then I can see it. But I doubt that it's the case in the US where those fees have to fund 2% cashback programmes etc.

Even for a small retailer, (i)zettle costs 1.75%[1] per transaction. No monthly fees. I honestly can't see how cash can compete with that. You need to spend time managing your change. You need to have some kind of register. You need to take your cash to the bank (which is far from free, and takes time). You need to manage your operations so that nobody steals or loses your money. Only "benefit" in cash is that tax avoidance may be easier, if you are into such things.

If I'd start a small business, I would flat out refuse to take cash. (in Europe)

[1] https://www.zettle.com/gb/help/articles/1084775-pricing

I think it's totally doable if you can avoid cash completely, but for most of the costs of handling it, they hit when you take your first dollar. If you're already buying a cash register, counting, making change, stocking cash/change, making a trip to the bank, etc., the incremental costs of additional cash transactions are minimal. Even with steps up for things like time-locked safes or pickups by armored cars.

I agree with the sentiment, though. I guess realistically if it were my business, I'd need some significant evidence that I wouldn't be losing money by not accepting cash. That's the extraordinary claim, after all, with the vast majority of businesses doing it.

I think I've seen a few food trucks in my area that don't take cash.

Having worked for a company with a similar model, the problem with not having rate parity is that companies will then use your site for lead generation but encourage people to book directly. Also, the industry I was in had more transparent pricing than is typical in hotels so the client would often realise they had been made to pay extra for using the intermediary and leave bad reviews about the price discrepancy.

So long as there is sufficient competition in the industry then I don't think it's in the consumer interest to ban rate parity.

> companies will then use your site for lead generation but encourage people to book directly

Of course. That would be the whole point. In that case the OTAs would need to start figuring out how to actually produce value to both end customers and hotels instead of just rent seeking.

I for one consider that being able to compare prices and availability across a large segment of the market to be consumer friendly behaviour. Additional fees for the privilege, not so much.

Hotels are of course free to decline a business relationship with the various OTAs and traditional travel agencies for that matter. So long as no one OTA has a monopoly I don't think there is a problem.

> Additional fees for the privilege, not so much.

But you understand that as the end customer, you end up paying the fees anyway, even if they are not visible in the bill? If your customers were unhappy about the extra cost, maybe you were not open enough about them or maybe the customer did not think your service worth the extra fee? After all, if the end customer is the one paying the fee, hotel has no incentive to try to get the customer past the OTA. They get the same money anyway.

You could say that for any marketing activity. You don't expect a hotel to add an additional fee for the fact that you seen an advert in a glossy magazine, or for providing their own website for that matter.

I'm sure you are aware that the entire travel industry, predating the advent of OTA, works on a commission basis.

Mariott Bonvoy chain has member rates for a reason, and they are great, although they could be more predictable so that I could search on booking.com and know the member pricing.

Can you tell us a bit more about your experience with them? And costs?

My favourite hotel with them with value/price with member rate was this Ritz Carlton in Portugal (less than 200 USD/night for standard room):

https://www.ritzcarlton.com/es/hotels/europe/penha-longa#HOT...

If you use their site, they give you some money that you can use to eat at their pricey, but amazing restaurants (also 2 of the hotel's restaurants has Michelin star, but I haven't tried those yet).

Their swimming pool / jacuzzi is bad, but the nature, the castle and the room is great.

I never saw any "great" member rates via Bonvoy, they are typically just 5% lower than the street price. And in exchange I should surround my ability to choose from all other competitors. Also, they will not allow mw to reclaim any points/benefits for stays booked via agents. It's understandable, but looks extremely cheap.

Sure, I understand it, I also first look at the hotels to go, but I go to a lot of reserves, and the best ones are quite often Ritz Carlton or Four Seaons. Four Seasons don't have member rates though.

They used to have roomkey.com and it would show you all the hotel chains' options. Was actually a very nice site, and you could quickly compare all the lowest rewards member pricing (lower than expedia or priceline offerings, since there was no commission to be paid).

They didn't advertise it for years and then and killed it for some reason.

It's also possible that certain markets (especially with expiring goods like hotels and airlines) earn sufficiently more money via price segmentation that it makes sense to pay middlemen. For example, if you have 100 rooms in a hotel, and you can sell 20 of the rooms for $x, the next 20 for 1.1$x, the next 20 for 1.3$x, the next 20 for 1.5$x, and the last 20 for 2$x, then the ability to price discriminate might be worth it.

Antitrust?

Yeah that sounds like price fixing.

I always wondered why airlines are not pilot-owned.

United went through a period in the 90's where it was majority-owned by its employees, which ended when it restructured under bankruptcy in the mid-2000's: https://en.wikipedia.org/wiki/UAL_Corporation#History

In general, airline employees enjoy very strong unions, not only for pilots but also flight attendants.

Airlines are literally among the most capital intensive industry out there. Where are some pilots getting their first billion for aircraft, flight scheduling, landing slots, fuel, maintenance contracts, etc...

Notice how most employee co-ops such as law firms have essentially zero capex requirements. They don't need startup capital that necessitates shareholders.

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