[A2Focus] Accommodation app is more expensive than on-site payment… Consumers upset over brokerage fees

Significant expenditures by stores, including advertising costs
Passed on to consumers... The price burden increases
Need to prepare accommodation reservation platform regulations

“The reason I use the accommodation reservation platform is because of the low price, but on-site payment is cheaper, so I feel like I’m being ‘gang-guyed.’ If you call and complain, it’s difficult to get a detailed explanation due to internal regulations, and the connection itself takes too long.”

Mr. A, an office worker in his 30s who planned a domestic trip with his family for the summer vacation season, heard from the hotel staff on the day of check-in that he could stay for about 80,000 won cheaper than the price through the accommodation app. Mr. A expressed his dissatisfaction, saying, "When I inquired about the accommodation app, it confidently stated, 'This is something you already agreed to when making the payment, so refunds are difficult and price differences may occur.' When I inquired about the commission policy, etc., they said, 'They can't explain it to me.'" In the end, Mr. A paid about 80,000 won more per night and stayed for 3 days and 2 nights.

As the summer peak season approaches, voices of travelers complaining of such complaints are rising one after another. Accordingly, experts pointed out that regulations on accommodation platforms are necessary in a situation where the burden on lodging companies is increasing, such as expensive advertising costs and high entry fees.

According to Asia Today's coverage on the 28th, the average brokerage fee for accommodation reservation platforms is about 11%. It was found that reservation (brokerage) fees ranged from as little as 8% to as much as 17% depending on the brokerage transaction and consignment transaction sales commission for each store.

Accommodation companies not only pay high brokerage fees but also spend a lot of money on advertising. In fact, according to the Korea Federation of Small and Medium Businesses, the average monthly advertising cost spent by lodging app companies on the platform is 1,079,000 won, with exposure advertising cost of 822,000 won and coupon advertising cost of 257,000 won each.

As these platform fees are ultimately passed on to consumers, the price gap is increasing. The legal community explains that it is difficult to hold online platforms legally responsible for double pricing. Most online platform cases involve small amounts of less than 30 million won, so even if litigation progresses, platform companies come to a 'quiet agreement' rather than a fundamental solution such as revising company policy or changing terms and conditions.

Jinwoo Kim, attorney at Daeryun Law Firm,“If a platform company says they will not charge a cancellation fee and then accepts it, it will be considered an act of deceiving the consumer and could be subject to criminal punishment for fraud, but otherwise, actual punishment is difficult. Victims also want more financial compensation, so there are cases where the platform company quietly agrees with the consumer and pays the money. If the ruling goes to the appeals court and the Supreme Court is confirmed, the platform company will try to move on quietly because a precedent will be established.”He pointed out.

However, there are also predictions that companies will be on alert as a series of cases have emerged recently in which affected consumers can impose strong legal sanctions on online platforms through class action lawsuits rather than individual cases. Attorney Kim said, "In the case of class action lawsuits, it can be a way to protest more strongly against companies. As such movements have recently been taking place in the legal world, companies will also be alert and revise their terms and conditions."

Lee Eun-hee, professor of consumer studies at Inha University, also said, "Accommodation apps are acting as dictators and taking advantage of double payments to control consumers. As part of measures to minimize damage to consumers, collecting signatures through online communities and informing the group of the damage could also be a way."

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