The Ghost Hotel -- Hotel Booking Fraud Raises Its Ugly Head

05/28/2015 12:18 pm ET | Updated May 27, 2016

Woo-hoo! You are all set for your vacation! The bags are packed, the plane tickets bought; you even lined up somebody to water the fichus. And of course, you booked the swanky hotel.

Or did you?

Prime travel season is right around the corner, and on its coattails is what in the industry are politely referred to as "third-party booking sites." They aren't the actual hotel, or even a partner. They are a whole different entity that often has nothing to do with the location you are headed off to. In fact, they may not even be the location at all. Welcome to hotel booking fraud.

Meet the Enemy
Last year the worldwide travel business hit $145 billion -- of course people are going to try to scam that. The hallmarks are there if you know how to spot them, bad deals disguised as "discounts," un-cancelable tickets, irresponsible privacy and data protection practices, false reward programs, deceptive links and misrepresented identities, and particularly bad customer service. But in a bitter irony, this isn't a scam that finds you. You find it, usually on a search engine.

Say you are going to a place to which you have never been, and you do a search for hotels at the location. Hundreds/thousands/millions of choices pop up. You click one; thinking you will, naturally, go to the real site of the real hotel. And then the fun begins. In reality, there is no guarantee that the site you clicked is the "real" one. This isn't the hotel's fault nor Goggle's; it is how the scam works.

"We all use search engines; that's part of the excitement of increasing technology," says Katherine Lugar, the President & CEO of the American Hotel & Lodging Association (AH&LA) industry watchdog. "But what we tell the consumer is to take the 'extra step.' Make sure you are booking with whom you believe you are."

Yes, this means you may actually have to do a search of a search to make sure everything is copasetic, but it beats the alternative of getting robbed blind or, even worse, flying all the way to Honolulu or Venice only to find out the hotel has no idea who you are, much less a reservation under your name.

Currently petitioning Washington, DC, to address the problem, the AH&LA admits this one snowballed fast. These rogue sites are very good, or at least brazen, at what they do, going so far as to imitate part and parcel legitimate hotel websites. Some of the worst players in the game are and But this isn't a simple game of avoidance, of simply not going to those two sites.

Tales From the Trenches
Like a lot of people, Debbie Greenspan did not think she was getting scammed simply because she wasn't looking. Preparing for a business trip, she started to research hotels where to stay.

"I got online and searched for a specific hotel I had stayed at before," she explains. Calling the provided number, things then got a little shifty when the representative on the other end of the line began to do a hard sell.

"She asked me to hold, came back in a few minutes, and told me there were only three rooms left and that I better book now or else I wouldn't get a room. She was very aggressive and almost intimidating, and being under stress, I went ahead and booked the room."

It was not until later, when she needed to cancel, the Greenspan found out she had never talked to the hotel. Rather she wound up at a hotel booking site, and she found out the hard way the difference between the two.

"I had called the hotel to cancel the reservation, and they were the ones that informed me that the reservation was not booked through them, and therefore they were unable to alter it," Greenspan recalls. "The hotel advised me of who the reservation was through, so I contacted them and they would not let me cancel, and on top of that I even found out they booked a different hotel than what I had asked for."

As a final kick in the teeth, Greenspan found she could not cancel her reservation at all. This set off months of back-and-forthing between her and the booking site, which ultimately never did reimburse her.

"I was swindled, plain and simple," Greenspan sighs. And just to rub salt in the wound, she had once worked in hotel reservations and still did not see the hole she was in until it was too late. Not only that, she had handed over all her financial information to who-knows-who. Which is a whole other can of worms.

Hercules and the Hydra
It doesn't help that a lot of the go-to on-line resources are part of the problem. Lugar describes how it works: Hotels provide a certain amount of their inventory to reputable travel sites like Priceline, Orbitz, Expedia, and Travelocity. These sites, however, turn around and provide inventory to their affiliates, and that's when it starts going south -- Expedia alone has over 6,500 affiliates. The official line is that all these adjuncts are monitored and kept in line, but from a practical standpoint, there are just too many for a single Website to do that. Hotels and resorts are very aware of the problem, and vigorously hunt perpetrators down, but as soon as one rogue is taken out, two others take its place in the uncharted and constantly changing geography of cyberspace.

This means the best way to find them is through customers such as you. The AH&LA estimates there are some 2.5 million bookings a year that are misleading. That translates to more than $220 million in costs to consumers from lost rooms, bad bookings, cancellation fees, and charges. It is in everybody's interest that we stay vigilant.

The easiest way to make sure everything is on the up and up, notes Lugar, is to look at the URL of the website you landed on. Hotel chains, and even independent players, have very short, simple Web addresses: "," "," "," etc. Some, like Hilton, are a little longer, but if you call up or search-find a hotel site and the URL goes right off the page, the red flags should start flying.

Another warning sign is if you call their customer service number, and the mystery voice on the other end claims to be the hotel's reservation desk. If that happens, have fun and run with it...and get really demanding.

"Ask about things unique to that location, something only that hotel would know" Lugar advises. "Restaurants, local cultural attractions, holidays -- even directions! If the rep starts getting dodgy, you probably are dealing with a rogue."

When and if you do find such a site, or suspect you are half-way into a scam, the best thing to do, aside from dumping them on the spot, is to report them. Hotels are very interested about third-party vendors using their names and logos without permission (lawsuit!), and the AH&LA and Federal Trade Commission (FTC) have whole pages dedicated to this type of thievery (more lawsuits!). The FTC even has tips on how to get your money back, should things get that far.

The Bitter Truth
In spite of our skeptical, cynical, conspiratorial, and penny-pinching age, the AH&LA says that while these sites market themselves by saying you can save up to 40 or 60 percent, the hard truth is that most hotels have a lowest price guarantee if customers book directly. It is the old warning of things looking too good to be true because they are.

"If something doesn't feel right, it probably isn't right," Lugar sums. "If consumers want to be sure they are getting what the believe they are getting, book direct with the hotel chain. They will have far more certainty in the process."

More over, if customers have a thing for chain hotels, a search engine isn't even needed. A chain's general homepage will have a location-finder option. For example, go to the Kempinski Hotels site and there it is, the "Destinations" button on the upper left. At Marriot's, it is practically the first thing you see. If you want an independent experience, Starwood just started up its Tribute Portfolio program specifically for non-team player properties, and hotel review sites like TripAdvisor have reputable links for the little guys.

Like Greenspan, even the savviest travelers are getting tricked, so, says Lugar, "Be aware of the problem. It's a trend. Our research shows it's a trend. And it's on the rise."