Agoda sales practices slated by operators

Accom owners have levelled fresh criticisms at Agoda, just days after the bookings platform was named among OTAs banned by the UK from using ‘sharp practices’.

Agoda is offering upfront loans to local accommodation businesses in return for a higher commission on rooms booked through the site.

The Singaporean company, which is owned by Booking Holdings, argues: “We offer a wide range of pricing tools that includes discounts and promotions, and over which our accommodation partners have full control. These are employed as effective and common ways for properties to attract travellers and improve their room night sales growth.”

But some operators argue offering cash incentives to struggling businesses merely tempts vulnerable operators to commit to a deal which will leave them financially worse off.

One, who asked not to be named, said she had been visited by Agoda representatives who promised they could “push and double” bookings.

“They told me they would give me $35,000 upfront to do what I like with. In return I had parity with all the other OTAs (told them I already did this). They charge me 25 percent…extra ten percent…for this money which was deducted off the booking I get.

[pro_ad_display_adzone id=”15046″ align=”left”]“I told them they charge ten percent on a loan. Told them that was a rip off and very unfair and ‘no thanks’ I don’t want your money.

“I also told them if you take that amount of money off motels they would go broke.”

Ross Given of Camden Motor Inn told Accomnews: “Agoda offers a cash up front incentive to the accommodation house to persuade them to give the 25 percent discount.

“Agoda (when probed by me about this when they offered it to me) say that they have the ability to manipulate the listing/algorithms, however they do it, so that their site attracts huge volume, as they like to get their investment back in, say, nine months, if the deal is for, say, 12 months.

“This sounded extraordinary to me, but if you were a struggling destination, and someone offered you large amounts of cash up front, in effect for nothing, it would be very tempting!!”

The retired solicitor, who introduced affordable conveyancing to Queensland in the 1990s, added: “Maybe the operator just inflates the price to cover the excessive commission, but I don’t even think that would work, as competition is intense in this sector, and almost self-regulating re: price.”

When approached for comment, Agoda spokesperson Allison Wright said: “In relation to Agoda’s Advance Guarantee Program (AGP), it only makes business sense to enter an AGP deal if there is a mutually beneficial reward for both parties – increased room nights and customers for the property and return on the prepayment for Agoda.

“We are constantly working with our accommodation partners to find the best programs for a win-win partnership and maximizing the production we drive for the hotels.”

Chris Fozard, operations manager of the Budget Motel Chain described the policy as “yet another win-win for the OTAs and a nett-loss for the Australian accommodation provider”.

Mr Fozard said he was concerned about how far OTAs would be will be willing to push the power of their algorithms, given their ability to ‘darken’ a property not conforming with their stipulations, so making that property almost invisible online.

“I don’t think anyone would be surprised to know they have the ability to manipulate their algorithms to suit those who pay more,” he said.