Taking on unfair pricing
Small and medium-sized tour operators have taken legal action against the alleged unethical business practices and predatory pricing systems deployed by OTAs.
In a first of its kind protest, more than 1000 small and medium enterprising (SME) tour operators protested against the OTAs at Jantar Mantar recently. The SME tour operators alleged that OTAs are deploying unethical business practices in order to kill competition in the market by selling products and services below the purchase cost aided by foreign funds. Subhash Goyal, Immediate Past President, Indian Association of Tour Operators (IATO), says, “The foreign funded OTAs are buying a hotel room for ` 2,000 and selling it for less than ` 1,000. With this type of practice none of the small operators can compete and slowly they are going bankrupt. This is a very serious situation and the government and all travel associations must look into it.”
Harjinder Singh, Partner, 24x7travels.com, informed that an association of small and medium tour operators is also on the cards to address the issues in a united voice where the sales staff, marketing executives along with the non-IATA agents will also be represented. Singh adds, “We are not against use of technology and in fact implore SMEs to adopt technology. However, OTAs are garbing behind technology and actually using predatory pricing which is illegal under CCI. They are using their dominant position and not technology to kill the business.” The agitators said they are against the e-coupons and cash discounts offered by the OTAs to reduce actual costs and argued that funding received by OTAs is a result of black money flowing into the industry.
Neeraj Rustagi, Director, Regency Tours, says, “Indian hotel industry has to maintain their agreements with the vendors and OTAs have to maintain the rate contracted on a condition of not subsidising it and devaluating the property in the market.” A memorandum to this effect has been sent to the Prime Minister and Tourism Ministry and various travel and tourism associations will take up a legal battle with CCI under unfair and unethical trade practices informed Shailendra Srivastava, Managing Director, Krishna Holidays.
This is a very serious situation and the government and all travel associations must look into it