Under a new deal set up by the Australian Competition and Consumer Commission (ACCC), hotels can now offer travellers a cheaper rate direct than those available through online travel agents (OTAs) – but they still can’t do so online.
Hotels will now be able to offer cheaper prices than an OTA over the phone, over the counter or via a loyalty club – but not online. Hoteliers say online is where it counts, so the new deal doesn’t go far enough.
Following an ACCC investigation, the ACCC announced last week that Expedia and Booking.com had each reached agreement to amend price and availability parity clauses in their contracts with Australian hotels and accommodation providers.
“The agreements extend to the largest online travel sites used in Australia for Australian accommodation including Booking.com, Wotif.com, Hotels.com, and Expedia.com and will remove barriers to price competition between major online travel sites for hotel bookings,” the ACCC said.
Parity clauses generally require accommodation providers to offer best price and availability to online travel sites. This guarantees the online travel site the accommodation provider’s lowest rate and prevents competitors and consumers from negotiating better deals directly with the provider.
“The ACCC commenced its investigation after accommodation providers raised a range of concerns, including that these parity clauses were anti-competitive as they stopped consumers from getting different prices from competing online sites,” ACCC chairman Rod Sims said.
“Australian accommodation providers will now be able to tailor their offers to better meet the needs of their customers and their own businesses requirements. They will now be able to offer lower rates through telephone bookings and walk-ins, offer special rates and deals to customer loyalty groups, in addition to offering deals via Expedia and Booking.com.”
The accommodation organisation Tourism Accommodation Australia (TAA), however, expressed concerns about the deal in regard to restrictive price practices.
“TAA welcomed the chance to be included in discussions with ACCC, but has advised ACCC that in its view the agreement doesn’t go far enough to protect hotels and consumers,” TAA chief executive Carol Giuseppi said.
“Whilst the decision that hotels no longer have to give OTAs the same availability of rooms was welcomed, TAA advised the decision to allow OTAs to prohibit hotels from offering lower rates online clearly lessened competition and was detrimental to hotels and travellers.
“We advised the ACCC it should have insisted that OTAs allow hotels to set their own rates online.”
Giuseppi confirmed that hotels would be able to offer cheaper prices than an OTA, but only over the phone, over the counter or via a loyalty club.
“Smaller hotels in particular feel very vulnerable to the power of the global OTA duopoly. The ACCC needs to send a stronger message to these two global giants to ensure travellers’ interests are protected,” Giuseppi said.
“Over the past year a number of hotel groups have committed to providing members of their loyalty programs with exclusive rates lower than that offered by OTAs, which highlights the benefits of booking direct with hotels.
“For consumers, joining a hotel’s loyalty club is the best guarantee of accessing competitive rates.”
The ACCC said it conducted a range of targeted market inquiries, including an online questionnaire to Australian accommodation providers seeking specific information about their dealings with online travel sites. After reviewing over 500 responses and speaking with industry participants, the ACCC identified the key issues as the use of broad price parity and room availability clauses by online travel sites.
“The ACCC is pleased Booking.com and Expedia have agreed to amend the parity clauses in their contracts, because it will increase the incentive for them to compete with each other and allow consumers to shop around to get the best deal,” Sims said.
From 1 September 2016, Expedia (which includes Wotif.com) and Booking.com have removed contractual requirements for Australian accommodation providers to:
- offer room rates that are equal to or lower than those offered on any other online travel agent
- offer room rates that are equal to or lower than those offered on an accommodation provider’s offline channels
- make all remaining room inventory available
- offer the same number and same type of rooms offered to any other online travel agent.
Written by Peter Needham