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Hoteliers denounce ‘online travel agency duopoly’

November 18, 2016 Headline News 1 Comment Email Email

egtmedia59The 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, 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, 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 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

Currently there is "1 comment" on this Article:

  1. AgentGerko says:

    Good points, Peter. The ACCC is notorious for taking on some issues and ignoring others. They worry about airlines charging a $7 credit card fee but think nothing of the same airline charging hundreds of dollars in highly suspicious “fuel surcharges”. Expedia should never have been allowed to buy Wotif, which they immediately changed from a good Australia-centric booking service to just an Expedia clone. And having to pay a 15% commission can only force these small operations to increase their rates. The only point I will make to the Accommodation Assoc is that for years regular travel agents were pushed away by motels and hotels who didn’t want to pay us even 10%. This refusal is partly to blame for the expansion of companies like Expedia and If you had allowed ordinary agents to book direct and earn a fair recompense then maybe you wouldn’t be over a barrel now.

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