• CRAPITALISM: Hotel Lobby Gets Washington to Trample Competition

    Washington is filled with crony capitalist seeking to use their friends in government to pad their bottom lines. It is rare, however, to see the game plan laid out in stark terms for the world to see. That’s exactly what happened when the head lobbyist of the American Hotel and Lodging Association sent out an email bragging about recent efforts to hinder the ability of consumers to use third party booking sites like Booking.com, ReservationCounter.com and ReservationDesk.com to book hotel rooms.

    Companies like Expedia have become so successful that in 2013 a hotel consulting and advisory firm noted that the industry is “feeling the pain” from their “dependency” on third party booking sites and are “urgently trying to devise ways to lessen their exposure.” Hotel owners have even called their dependence on these sites as “hotel cocaine.” Rather than pay commissions, the hotels would rather pocket the money.

    So the hotel lobby did what any good crony capitalist would do — turn to the government to stomp out the new and growing technology that consumers have come to rely on to bring customers to their door. The powerful hotel lobby, formally known in Washington as the America Hotel and Lodging Association (AHLA) has undertaken a campaign to smear their competitors and they are openly bragging about it.

    AHLA has placed dozens of media stories in television and newspapers warning consumers about the dangers of using companies like Expedia and others. The common theme of the media blitz is if you want to safely get a room (even at a higher price), book directly with the hotel chain.

    If that doesn’t wean consumers off their “hotel cocaine” addiction, perhaps a more costly and direct route will — government action. The lobbyists used the stories they placed to convince members of Congress to get involved on their side.

    Five Arizona congressmen, including some free-market proponents like Rep. Paul Gosar (R-AZ) sent a letter to the Department of Justice demanding a look. Worse yet, the Senate Judiciary Committee Chairman Sen. Chuck Grassely (R-Iowa), who oversees the Federal Trade Commission (FTC) sent a letter urging action.

    The Members of Congress were tricked into believing the false claim that hotel lobbyists have put out. They claim that these third party sites are tricking consumers into believing they are actually booking directly with the hotel. They believe that consumers are too stupid to know the difference between Expedia.com and Marriot.com.

    This is all another example of cronyism that is inherent with both political parties. In this case, however, we have a smoking gun. In addition to the near quarter of a million dollars in political contributions the AHLA has handed out, we now have possession of an email from the head lobbyists of the hotel group bragging about their campaign. Here in black and white we see the outlines of how the hotel chains are trying to end their addition to the “hotel cocaine” — through government force rather than consumer enticement.

    Below is the smoking gun email from a hotel lobbying organization that is spreading lies about third party booking sites. Click to enlarge.

    hotel cronyism


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    Cloakroom Confidential

    Cloakroom Confidential was a longtime Capitol Hill staffer and insider who has contacts in the House and Senate at the highest levels.

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