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Wotif/Expedia deal ‘could lead to higher commissions’

October 7, 2014 Headline News, OTA News No Comments Email Email

egtmedia59The Accommodation Association of Australia (AAoA) has voiced concern over a decision by the Australian Competition and Consumer Commission (ACCC) to allow the acquisition of Wotif by Expedia.

The AAoA, the Australian Hotels Association (AHA) and Tourism Accommodation Australia (TAA) have all raised concerns about the impact on the Australian accommodation industry around Expedia’s acquisition of Wotif.com Holdings Limited (Wotif).

AAoA chief executive Richard Munro said that the acquisition “may trigger major commission rate increases, flowing onto consumers and the Australian tourism industry with higher rates.

“With less competition, higher commission fees and reduced hotel margins, this cannot be good news for consumers.

“The AAoA, the AHA and TAA all believe that Wotif is a well-established and high-profile agency for accommodation bookings in Australia and is an important competitive player in the market, constraining international efforts to control the Australian industry.

“Rejecting the acquisition would have maintained choice for accommodation providers between multiple, foreign and Australian operators with different commission models for selling their rooms online through third-party websites,” Munro concluded.

The ACCC took note of the concerns but decided not to intervene in the acquisition.

“The ACCC noted the concerns raised by market participants that Wotif represented an important source of bookings for some accommodation providers and that its removal from the Australian market may result in them paying higher commission rates to online travel agents (OTAs),” ACCC chairman Rod Sims said.

“However, the ACCC found that there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years. This has included new entry by a number of competitors and business models, including Booking.com, which has grown quickly to become the largest OTA in Australia.”

The ACCC also noted the increasing importance of metasearch sites such as TripAdvisor and Google Hotels Finder, which aggregate the offers of hotels and numerous OTAs in one place for consumers to choose from.  TripAdvisor is consistently one of the top two travel-related websites visited by consumers in Australia.

“Metasearch websites increasingly facilitate hotels’ ability to promote themselves alongside OTAs, and transact directly with consumers,” Sims stated.

“The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry. Disruptive developments from smaller OTAs and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future,” he added.

For these reasons, the ACCC concluded that the proposed acquisition was not likely to result in a substantial lessening of competition. The ACCC will outline the reasons for its decision in more detail in a forthcoming Public Competition Assessment.

On 4 September 2014, the ACCC had released a Statement of Issues outlining preliminary concern that the proposal may result in a substantial lessening of competition in the supply of online distribution/booking of Australian accommodation.

Edited by Peter Needham

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