Tourism Accommodation Australia (TAA) is calling on travellers to bypass online travel agencies (OTAs) and book direct with hotels following the decision by online agent Hooroo (a wholly owned subsidiary of the Qantas group) to increase commission rates by 30% from 1 July 2015.
TAA had warned the ACCC that OTAs would look to raise commission levels as a result of last year’s takeover of Wotif by the global giant, Expedia. The online travel market is now dominated by Expedia and Priceline, which account for some 85% of the Australian market.
Tourism Accommodation Australia’s acting chief executive, Carol Giuseppi, said that ultimately consumers would end up paying higher prices as a result of the sharp commission increases, though hotels would also suffer as well.
“Unlike OTAs, our industry is highly competitive and is set for a massive increase in supply over the next few years, which will mean that some hotels will have to absorb some of the increased commission charges,” Giuseppi said.
“The businesses that will suffer most are the small regional hotels, motels and B&Bs who don’t have their own booking engines. For many of them, a 3% increase in commission levels can represent an increase of up to 30% in their total sales costs with the potential for further increases highly likely.
“What is annoying is that we predicted at the time that the takeover of Wotif would lead to a surge in commission charges, and that’s precisely what has happened. While we had an independent Wotif, it helped maintain more moderate commission levels, but the takeover of Wotif has precipitated an opening of the commission floodgates.
“We will be making a strong case to the ACCC to scrutinise the OTAs to ensure they don’t follow the European and US trend of plus-20% commission levels, otherwise the Australian hotel and tourism industry’s growth potential will be seriously stymied and consumers will pay considerably more through lack of competition.
“We would encourage consumers to book directly with hotels to prevent significant future price increases and secure more value.”
MEANWHILE, Booking.com, an operating business of The Priceline Group announced it will waive enforcement of its existing wide parity provisions with German accommodation with immediate effect and will amend its standard terms and other agreements with German accommodations by 1 July 2015 to be consistent with the binding commitments given to the French, Italian and Swedish National Competition Authorities.
As a result, German hotels, and consumers booking at German hotels, will get the same benefits as their counterparts in France, Italy and Sweden. Under the new provisions, Booking.com will abandon its price, availability and booking conditions parity provisions with respect to other online travel agencies.
Edited by Peter Needham