HotelJoin is left behind as travel industry rapidly evolves

Hotel booking agency HotelJoin ceased operations on March 26, shutting down its website and potentially leaving hundreds of customers with reservations missing and deposits unaccounted for.

HotelJoin posted an announcement on its online blog directing all customer complaints to the Korea Association of Travel Agents, or KATA. Between March 26 and Monday, around 200 complaints regarding HotelJoin have been posted on KATA’s online message board.

Most complaints came from users who had made paid reservations through the company. Each booking is estimated at between 300,000 ($282) won and 500,000 won, with total damages nearing 60 million to 100 million won.

Industry experts are not surprised since the company has reportedly been struggling for years to meet hotel payments in time, while global and domestic booking giants continue to suffocate the smaller players in the market.

“Goodmate, the company that runs HotelJoin, has insurance coverage of up to 50 million won with Seoul Guarantee Insurance,” explained KATA Director Choi Chang-ho. “If total damages exceed 50 million won, however, customers will only be partially compensated. The earliest customers can probably be compensated is this June.”

“In the last few years, there were red flags and rumors that HotelJoin was not able to properly settle payments with hotels,” added Choi.

“Though HotelJoin is an established player, it fell behind global online travel agencies and increasingly popular accommodation booking apps,” said one industry expert.

Since 2004, when the government adopted the five-day workweek, the domestic tourist industry has grown as Koreans began traveling more during weekends.

Those who reported they had traveled around the country increased from 72 percent in 2010 to 89 percent in 2016, while the estimated amount spent on domestic traveling jumped from 16 trillion won to 25 trillion won during the same period, according to the Korea Culture & Tourism Institute.

The number of hotels in Korea, which numbered 966 in 2012, also rose to 1,844 last year. The entire market size of the travel accommodation industry including motels is now estimated at 5 trillion won. Online search and booking agencies claim some 30 to 40 percent of the market.

Though the pie may be getting bigger, global and domestic online travel agency giants like Expedia and Yanolja are taking the biggest pieces.

One-fifth of the reservations made in five-star hotels in Korea are believed to be conducted through Expedia. This is impressive, considering that customers make hotel reservations by contacting them directly 40 to 50 percent of the time, either online or on the phone.

Global travel agencies like Expedia usually take 16 to 20 percent from hotels in a service charge, while domestic agencies take 10 to 11 percent.

New major players are changing the rules of the game in the flight ticket booking scene as well. The most popular airlines of the early 2000s no longer make it to the top 20, as flight comparison sites display the lowest fares among hundreds of airlines on a single screen.

“Traditional travel agencies are now overshadowed by flight comparison sites,” explained one industry expert. “People are checking Skyscanner for the cheapest fares and hotels, and making reservations on Expedia and other major online travel booking sites.”

“Companies should develop more products that make use of their expertise and experience rather than engage in cutthroat competition,” said KATA chairman Yang Moo-seung.

BY KIM EUN-JIN [kim.eunjin1@joongang.co.kr]