Hotel Lobbyist are trying to destroy competitors with good old American Ingenuity, Twenty-First Century style. In the old days, we made better products. Today we simply lobby Congress to legislate our rivals out of existence.
Do you like booking your travel adventures through sites like Expedia or Priceline? If you do then you are one of many. It’s incredibly convenient and allows you to shop around quite easily. Instead of visiting the websites of dozens of hotels looking for a good price; all the information you need is in one place. This means you generally get a good price for your travel. Can you guess who doesn’t like that?
The hotel industry, of course. They’d prefer if you had to pick your room with as little information as possible about the price. It serves their interest if you pay more than the lowest rate. They don’t want you to know you can get the same room at a nearby hotel for a lower price. They don’t want you to know they are actually selling their vacancies at lower prices. They also don’t want to pay Expedia and Priceline when you book a room through them. That’s fine. That’s in their interest. What’s not fine is how they hope to resolve this issue.
The American Hotel and Lodging Association is planning to lobby Congress with the aim of getting the websites Expedia and Priceline dramatically restricted if not outlawed. The government agency that has oversight over this industry is the Federal Trade Commission. I find it a travesty this group has the right to tell hotels and travel sites how to conduct business, but I’ll save that rant for another day.
The argument AHLA makes is that Expedia and Priceline represent a monopoly on the travel business. That the various hotels are forced to go through them to list their rooms because there are no other options. Expedia and Priceline charge a fee to the hotel when a customer books a room through their agency. The hotels would, obviously, like to avoid that fee and have you book directly with them.
The goal is to have the current administration appoint friendly members to the FTC in order to get regulations passed that will hamper Expedia and Priceline.
I could spend a lot of time arguing the merits, or lack thereof, of this case but I’d like to keep my focus on the methods. This is standard operating procedure in the modern business world. Lobby government officials to change the rules to benefit you. That’s the most effective method of growing a business these days.
This is a product of government oversight. If the FTC didn’t have the ability to regulate the hotel industry then the entire problem disappears. At that point, the AHLA doesn’t have the ability to destroy their competitors through legislation. The argument is that we need such regulation to keep people safe from the predatory nature of those in businesses. The problem is such regulations have long since gone from protecting people to protecting the very industry they are designed to regulate.
This is the way business is done. Government can destroy competitors far more readily than can the difficult process of providing a great product at a price people want. Crony Capitalism is its name and it is spreading quickly.
The more power we vest in government to regulate us, the more interest business has in perverting government to protect them instead. When it’s easier and cheaper to destroy an enemy by lobbying Congress than practicing good business models, people lose.
How will it effect your financial well-being if these plans succeed? Something to consider.
Tom Liberman