70% of Accommodation App Users Including Yanolja and Yogi-ottae Report "Unfair Practices" Experience

Announcement of the Survey Results on Accommodation App Users Over 4 Days
94.8% of Companies Say "Commission and Advertising Fees Are Excessive"
78% Respond "No Change in Operating Profit After Joining the App"
65.8% Support the Enactment of the Online Platform Fairness Act

Asia Economy DB=Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Bo-kyung] Among accommodation application subscribers such as Yanolja and Yogi-ottae, 7 out of 10 companies have experienced unfair practices. The majority of accommodation providers (94.8%) responded that the levels of commissions and advertising fees are excessive.

The Korea Federation of Micro Enterprise (KFME) announced on the 4th the results of a survey conducted on 500 small and medium-sized accommodation providers subscribed to accommodation brokerage platforms (accommodation apps).

◆ "Joining accommodation apps, an unavoidable choice"= Among the surveyed accommodation providers, 92.0% were subscribed to 'Yanolja', 80.4% to 'Yogi-ottae', followed by Interpark Tour (31.0%), social commerce platforms (21.8%), Airbnb (13.0%), and Daily Hotel (12.4%) in order of subscription rates.

As of last year, the average monthly sales of these accommodation providers were 13.43 million KRW. It was found that 64% of the monthly average sales, or 8.59 million KRW, were generated through accommodation apps.

The average monthly sales by year sharply declined from 19.49 million KRW in 2018 and 19.61 million KRW in 2019 to 13.43 million KRW last year. A KFME official analyzed, "This reflects the difficulties faced by the accommodation industry due to a decrease in users caused by COVID-19."

The main reason for joining accommodation apps was "because it is difficult to continue business without using them (86.4%)." Additionally, after joining, 66.6% reported an increase in sales, but 78.0% said operating profit showed "no change."

Accordingly, KFME diagnosed that "the companies' subscription to accommodation apps was likely an unavoidable choice due to the expansion of platform dominance and changes in reservation culture rather than profit securing."

◆Commission takes 10%... Advertising fees up to 390,000 KRW= Regarding costs incurred when subscribing to accommodation apps, the subscription fee was up to 82,000 KRW, and the brokerage (reservation) commission averaged about 10% of the usage fee. Advertising fees were found to be up to 390,000 KRW per month.

In particular, 94.8% of respondents said that the levels of commissions and advertising fees paid to accommodation apps were excessive (very excessive 16.8% + excessive 78.0%). Those who responded "average" accounted for 4.4%, and "appropriate" only 0.8%.

Regarding transactions with accommodation apps, 69.4% reported experiencing unfair practices. Mainly, they cited "restrictions on self-advertising methods (24.4%)", "unilateral settlement processing (17.4%)", and "forced sales targets and compulsory use of additional services (15.4%)" as unfair.

Regarding product exposure order, 92.4% of respondents said it was "unreasonable." Also, 52.8% said negotiation with accommodation apps regarding transaction difficulties was "impossible."

◆ 65.8% support Platform Fairness Act... "Recommend standard contracts"= Regarding the 'Online Platform Brokerage Fairness Act' bill that the Fair Trade Commission is preparing to propose, 65.8% expressed support for its enactment.

Among those in favor, reasons included "establishing a concrete response basis against unfair trade practices (44.1%)", "expected expansion of online transactions making it necessary in the future (31.0%)", and "inducing platform companies' awareness and expecting voluntary improvement (26.7%)."

Among companies opposing the legislation, reasons included "concerns about excessive intervention in the platform market (49.7%)", "no problem responding under current Fair Trade Act (26.9%)", and "the bill's content is abstract and may lack effectiveness (23.4%)."

Regarding the bill, small and medium accommodation providers identified "inducing improvement through soft norms such as recommending standard contracts (40.0%)" as the most effective measure. This was followed by "obligation to provide written contracts (28.8%)" and "providing types of platform abuse of bargaining position (25.4%)."

Choo Moon-gap, head of the Economic Policy Division at KFME, stated, "Although the accommodation industry is one of the sectors most affected by COVID-19, recently, dependence on a few accommodation apps has increased, leading to many voices complaining about excessive cost burdens and unfair practices."

He also emphasized, "Along with enhancing transparency and fairness in transactions through the enactment of the Online Platform Fairness Act, minimum guidelines should be established regarding cost burdens such as commissions and advertising fees for tenant companies not only on accommodation apps and online platforms but also across online and offline distribution."

This content was produced with the assistance of AI translation services.