France has taken a massive step in favour of the hotel industry by forbidding so-called “parity clauses” in contracts between hoteliers and Online Travel Agents (OTAs). The move follows a similar move by Germany.
Parity clauses prevent hotels from setting lower prices on their online and offline direct distribution channels than those available through intermediaries such as OTAs.
The decision by the French national assembly gives hoteliers back their entrepreneurial freedom, letting them offer their customers any trade or tariff advantage they consider appropriate. It is likely to echo farther than France and may be adopted into European law.
“It is more than a victory for the profession, it is a revolution that is underway for the French hotel industry and for our customers,” Roland Heguy, president of the French hospitality industry union UMIH (L’Union des Métiers et des Industries de l’Hôtellerie), commented.
“After the decision of the Competition Authority, this vote will contribute to the establishment of a renovated contractual framework to restore conditions of a commercial relationship based on trust between hotels and booking sites in the interest of consumer.”
Christian de Barrin, chief executive of Hotrec, the umbrella association of hotels, restaurants and cafés in Europe, said France would be the first country where application of anti-competitive rate parity clauses would be explicitly banned by law “and the second country where such clauses would be banned in one way or the other, after the German competition authorities’ decision on the matter”.
Hotrec issued the following media statement after the historic decision:
The French national assembly took an important decision, by voting in favour of deleting any rate parity clauses from contracts between hoteliers and Online Travel Agents and qualifying the term of the contracts with online booking platforms as “mandate contract”.
This would be the first decision at legislative level to ban explicitly rate parity clauses from such contracts. With this decision hoteliers in France would finally regain their entrepreneurial freedom and will be ready to offer their customers any trade or tariff advantage they consider appropriate.
The decision would allow hotels to set lower prices both on their online and offline direct distribution channels, than the rates available via intermediaries, thus putting an end to mandatory rate parity clauses.
Compared to the decision of several competition authorities of 21 April 2015, which only allowed setting prices freely through offline or, in other words, 20th century distribution channels, like telephone, fax, letters, etc., this voted amendment follows the realities of current times.
Once the law will be finally adopted, the intermediaries would have to display any price as given by the hotels.
Written by Peter Needham