Consider this. You’re planning a holiday to Darjeeling and you want to book a hotel that’s centrally located. You have two options – either call the identified hotel directly to find out rates or check for deals on online travel portals. Owing to the discounts and deals offered online, you end up booking via these online travel aggregators.

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This is what most travellers are doing these days. This trend is much in line with a 2017 report published by Deutsche Bank AG. The online hotel segment has the potential to generate about $2.3 billion in gross bookings by 2020, the report said.

Faced by a supply surplus, this surge in bookings was good news for the hotel industry, initially. However, the steady shift in booking via portals such as booking.com or MakeMyTrip is making it unviable for smaller hotel chains. The reason – high commission structures. Hotel associations claim that online portals charge a commission in the range of 20-40 percent per booking. This translates into an approximate industry-wide payout of close to Rs 70 crore per day.

Another issue that the organised hotel industry is facing is the presence of unlicensed players on these portals. The Federation of Hotels and Restaurants Association of India claims that 40 percent of the room inventory available on these platforms are illegally operated and has no license. These are just a few of the issues that have been highlighted by the organised hotel industry.

Interestingly, the tussle between online and offline seems to be brewing in almost every sector. Online aggregators across sectors are facing the heat from associations or legacy players. For example, cab aggregators are facing the heat from taxi unions. Similarly, it is happening in the retail space and even in the food delivery space. While online aggregators have helped the grow or deepen the market further, offline or brick and mortar players are hurt owing to the loss in their business.

The ministry of tourism seems to have acknowledged this tussle brewing in the hospitality sector. The ministry has now decided to accredit Online Travel Aggregators (OTA). Guidelines set by the ministry will approve and classify OTAs to ensure the reliability of their services. The guidelines will provide adequate safeguards against deficiency of service, alternate arrangements, if needed and punitive deterrence. This recognition as an approved OTA will be for a period of five years and is based on the inspection report or recommendations of a committee. The recognised OTAs will receive an ‘Incredible India’ accreditation.

To speed up the government accreditation process for these online travel portals, the tourism ministry is asking them to conduct internal audits with respect to property listings on their platforms, said sources familiar with the matter.

Through these internal audits, the ministry is looking at weeding out existing unlicensed properties on the online travel portals. Stringent norms with respect to assessment and enrollment of properties will have to be followed by online travel portals. Accreditation of these portals is likely to begin over the next month. This exercise would be an important step to ensure that the quality and service of the offering is not compromised, the sources told CNBC-TV18.

First Published:Dec 10, 2018 3:56 PM IST