The accommodation industry is up in arms against what it says is an unhealthy concentration of power in the online travel agency market – and it is using an increase in online commissions to reinforce its case.
The Accommodation Association of Australia has formally requested Australia’s competition regulator to re-examine the issue in a letter to the chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims.
The action follows an ACCC investigation into the online travel agency market, which ended with the regulator negotiating an “administrative arrangement” with offshore online giants Expedia and Booking.com, who are said to control 80% of the Australian market.
“The Accommodation Association has major concerns with this decision and to say members of the Association are angry with the outcome of the investigation is an understatement,” the letter stated.
“The ACCC is seemingly unaware that the overwhelming majority of accommodation bookings in Australia in 2016 are made via the internet and that very few bookings are made directly with accommodation businesses and/or through ‘walk-ups’.
“The ACCC ruling will be detrimental for competition in Australia’s online travel agency market, which is currently a virtual duopoly.”
The correspondence highlighted what the Australian Accommodation Association says is an inconsistent approach on the part of the ACCC. In October 2014, the ACCC announced it would not oppose Expedia’s acquisition of Wotif, yet in July 2015, Booking.com lifted the commission rate paid by operators of accommodation businesses from 12% to 15%, the Accommodation Association says.
“Currently, Expedia and The Priceline Group (which owns Booking.com) control about 80% of the online travel agency market in Australia,” the letter stated.
“Given two online travel agencies control 80% of the Australian market, why do two giant overseas-based online travel agencies which employ very few staff in Australia and pay very little, if any, taxes in Australia need protecting ahead of small businesses in regional and rural Australia, as many of our members are?
“The ACCC has pursued action in the High Court against Flight Centre for pressuring airlines to offer it their lowest fares. The current situation in the accommodation industry is strikingly similar, yet the ACCC is taking a vastly different approach.”
Edited by Peter Needham