The DMA Dilemma: How Regulation is Crushing Independent Hotels

When the European Union introduced the Digital Markets Act (DMA), it envisioned a new era of fairness in the digital economy. Designed to check the power of tech “gatekeepers” like Google and Booking.com, the law promised to empower small businesses and enhance consumer choice. Yet, the DMA’s implementation has brought about unintended consequences, solidifying the dominance of Online Travel Agents (OTAs) and jeopardizing the survival of independent hotels.

A Flawed Experiment: Google’s Germany Test

Google’s recent test in Germany illustrates the DMA’s fallout. By removing its interactive map and free hotel booking links in response to the Act, Google reverted to a classic “ten blue links” format in its search results. While this might appear as a move toward neutrality, the impact on the hospitality ecosystem has been devastating:

1. Independent hotels lost a critical visibility tool, being pushed down search rankings beneath OTA-sponsored ads.
2. Travelers face higher costs, as OTAs increase commission rates, which hotels pass onto consumers.
3. Transparency diminished, with fewer tools for travelers to compare options or book directly.

The Consequences for Hotels and Travelers

1. Loss of Visibility for Independent Hotels

Google’s booking links provided a lifeline for small hotels, enabling them to compete with OTAs for visibility. Without these features, hotels are cornered into greater reliance on OTAs, which take steep commissions—often exceeding 15-18%.

2. Higher Costs for Travelers

OTAs’ commission structures, including charges for programs like Genius (10-30%) and preferred supplier status (3%), are quietly embedded in room rates. Travelers unknowingly bear these costs, paying significantly more for accommodations.

3. Erosion of Consumer Choice

The absence of tools like Google’s map strips travelers of a transparent way to evaluate hotels. Instead, they’re funneled into OTA-controlled environments where algorithms prioritize profitability over consumer interest.

4. Strangulation of Independent Hotels

Direct bookings are essential for independent hotels to sustain profitability and build customer loyalty. With the DMA unintentionally favoring OTAs, these hotels lose vital revenue streams and risk closure.

5. Homogenization of Hospitality

OTAs’ profit-driven models marginalize smaller, unique properties that embody local culture. This reduces the diversity of offerings, turning travel into a bland, standardized experience.

Who Gains? OTAs Tighten Their Grip

Instead of leveling the playing field, the DMA has inadvertently strengthened OTAs like Booking.com. They capitalize on Google’s reduced functionality to dominate search results through paid ads, leaving independent hotels to either pay exorbitant commissions or disappear from the digital landscape.

A Call for Urgent Reform

The DMA’s noble intentions have been overshadowed by its flawed execution. To restore balance and protect Europe’s hospitality ecosystem, the following steps are crucial:

• Restore Direct Booking Tools: Reintroduce Google’s interactive map and booking links to empower hotels and consumers alike.
• Hold OTAs Accountable: Enforce anti-retaliation measures to prevent OTAs from penalizing hotels that offer better rates directly.
• Enhance Consumer Empowerment: Provide tools for transparent price comparisons and seamless direct booking.
• Support Independent Hotels: Offer incentives for independent hotels to invest in their digital presence and compete effectively.
• Monitor Enforcement: Establish oversight mechanisms to prevent regulatory manipulation by corporate lobbyists.

The Clock is Ticking

The Digital Markets Act was meant to champion fairness but risks becoming a cautionary tale of overreach and unintended harm. For Europe’s hospitality industry, the stakes couldn’t be higher. The EU must revisit and refine the DMA to prevent it from being a legislative misstep that inadvertently stifles the competition it aimed to protect.

If the DMA remains unchanged, it will go down as a well-intentioned policy that failed to deliver, leaving the very stakeholders it sought to help—independent hotels and travelers—paying the price.