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Hoteliers say Flight Centre ruling changes OTA stance

January 5, 2017 Headline News No Comments Email Email

Consumers will be the losers unless the Australian Competition and Consumer Commission (ACCC) sets aside its recent agreement with global online travel agencies (OTAs), according to the Accommodation Association of Australia.

In the wake of the High Court ruling against Flight Centre, the ACCC must change its stance on OTAs, the Accommodation Association of Australia (AAoA) maintains.

The lengthy legal battle between the ACCC and Flight Centre over allegations of price fixing on international flights ended in December with a win for the ACCC. See: Flight Centre loses battle with ACCC over price fixing

The AAoA has called that ruling “a compelling legal signal that offshore online travel agencies are competing directly with operators of accommodation businesses”.http://itcmchina.com/

Unless action was taken to rein in the behaviour of online travel agencies, consumers would ultimately end up paying more for accommodation, the AAoA said.

“The High Court judgment against Flight Centre has rendered the agreement between the ACCC and Expedia and Booking.com in September virtually useless and therefore, we are calling on the ACCC to abandon it,” AAoA chief executive, Richard Munro, said.

“If the High Court has the view that competition laws apply to relationships between operators and their agents in the aviation industry, then the same must apply in the accommodation industry.

“The High Court has also made it clear that a business dictating to a competitor what they can charge for bookings is anti-competitive, including for bookings made on the internet.

“Consumers are clearly the ones who are missing out on securing the best price by booking over the internet. Given secret commissions of up to 20% are charged by online travel agencies, the cost of booking a room balloons and consumers are left out of pocket.

“The back-room deal between the ACCC and foreign giants Expedia and Booking.com has resulted in consumers only being able to secure a better price by telephoning accommodation businesses direct or by walking in to the property – but not on the internet, where more than 60% of accommodation bookings are made.”

Munro alleged big OTAs were dictating to motels what room rates could be charged. Various abuses were going on.

The AAoA is not the first to have noted an apparent contradiction in two ACCC rulings.

Back in September 2016, Martin Kelly’s authoritative Travel Trends noted that on the one hand, the ACCC had “relentlessly pursued Flight Centre, taking Australia’s biggest retailer all the way to High Court, accusing it of anti-competitive behaviour by pressuring Singapore Airlines, Malaysia Airlines and Emirate to offer it their lowest fares.

“On the other hand,” Travel Trends pointed out, “the ACCC has just said in the strongest possible terms different rules apply in accommodation by cutting a deal with the global online travel retail duopoly of Booking.com and Expedia that gives each of these companies the right to stop hoteliers from offering better deals than them on the web.”

As Kelly noted at the time: “The two outcomes are completely contradictory – in one case the ACCC has backed the right of suppliers (airlines) to undercut retailers; in the other they’ve said suppliers (hoteliers) cannot offer lower rates than retailers.”

Responding to similar moves by the AAoA on a previous occasion, Booking.com’s Oceania Regional Manager, Tracey Foxall emphasised that Booking.com remained “fiercely dedicated to fostering healthy competition in the marketplace by providing consumers with the best possible prices.

“We believe that parity actually encourages healthy competition between properties by facilitating the easiest and most transparent price comparison process for consumers and that online booking sites, such as Booking.com actively help keep prices lower for consumers.

“Booking.com brings incremental business which properties may not be able to generate themselves, at least not without making a substantial marketing investment on their own which ultimately results in additional costs, higher room prices, and no guarantee of results.

“In order to maintain our ability to generate significant customer leads for our partners, and invest in all of the new digital technology required to do so effectively, we need to ensure that our partners don’t undercut Booking.com in pricing.

“This is why parity commitments ensure partners provide the same rates on Booking.com as they do via their own direct online channels. This directly ensures that we can continue to give our customers great prices through a service they love, as well as continue to help all our accommodation partners – big and small – fill their rooms and grow their businesses.”

Written by  :  Peter Needham

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