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Dick Smith backs agents – declares war on OTAs

September 10, 2018 Headline News 2 Comments Email Email

In a sensational attack carried by social media and video channels, Aussie entrepreneur and campaigner Dick Smith has thrown his support behind travel agents and has joined the battle against big American-owned online travel agents (OTAs), which he accuses of “exploiting and extorting” Australian hotel and motels.

Smith is urging consumers to forget OTAs and book directly with small hotels and motels by phoning them. He says this works out cheaper for the consumer and better for the hotelier.

Smith leaves no doubt that he backs flesh-and-blood travel agents rather than big foreign-owned OTAs.

“I’ve always been a supporter of the travel agency industry,” he declares. “I always support an Aussie travel agent because a travel agent spends time going out and helping you with your bookings and everything.”

His video starts out: “Hi, it’s Dick Smith here and I’m bloody angry. I’m going to give you a story of millions of dollars being extorted out of hundreds of thousands of small Australian family businesses and being shipped off to a few billionaires in the United States.”

Despite Smith’s anger, there is no suggestion the OTAs are doing anything illegal.

Smith’s interest began recently when the proprietor of a small motel called the ABC’s “Australia All Over” Sunday radio show, hosted by Ian “Macca” McNamara. The caller said travellers could get a cheaper deal by approaching properties direct than by booking through OTAs. The big OTAs were charging 15% to 30% commission, he said.

Smith’s video, below, is delivered in the characteristically colourful manner of one of Australia’s best-known entrepreneurs and patriots, a supporter of Australia and its small businesses. His words must be music to the ears of the Accommodation Association of Australia, which has been campaigning on the same issue for years.

Smith says 50% of Australians now use OTA websites “because they have fallen for the lie that they’re cheaper”.

He says the Australian Competition and Consumer Commission (ACCC) has allowed OTA contracts to prohibit family motel websites from advertising cheaper prices than those displayed on the OTA sites.

“Now how can that be in the consumer interest?” Smith asks incredulously. “It just shows you the power of these multinationals. It’s outrageous.”

Smith says motels across regional Australia, including in districts currently struggling with drought, can’t afford to shun the OTA sites because so many people access them.

“I said to the motels, ‘Why would you bother to sign up?’

“And they said, ‘Dick, most Australians think it’s cheaper to go through one of these sites and so now 50% do’.

“‘So that means if we don’t sign up to one of these sites, we’ll lose 50% of our business and we’ll go broke’.”

The OTA sites, which many consumers think are competing, are in many cases owned by the same big US combines. Their market power and commercial deals often mean search engines feature their names more prominently than the more modest websites run by the hotels and motels themselves.

The realm of OTAs is dominated by two huge players: Expedia and Booking Holdings. The giant duo own numerous sub-brands.

For instance Expedia (which has Chelsea Clinton on its board, among others) owns Trivago, Travelocity, Orbitz, Hotels.com and Wotif (it bought Aussie operator Wotif in 2014); while Booking Holdings owns Booking.com, Priceline.com, Agoda.com, Kayak.com, Rentalcars.com and Cheapflights.

In favour of OTAs, some argue they increase a property’s visibility in the market and attract clients who pay more and stay longer.

OTAs say consumers can save money by booking airfares and accommodation in advance. “Nothing can beat the satisfaction of grabbing cheap flights and cheap hotels when they’re at their lowest prices,” Kayak.com.au proclaims.

 

Written by Peter Needham

Currently there are "2 comments" on this Article:

  1. bruce weston says:

    it is a shame almost nothing said here is factual firstly the commission is 12% secondly only a small percentage of bookings come from OTA certainly not 50% , in my case, where I NOW ACTIVELY encourage OTA participation it is about 30% – when I did not pursue OTA participation in my booking process it was less than 17% but my policy had , and still is to offer a 10% discount for direct dealing so really the ease and convenience to people – AND IN FACT MYSELF – is more than compensated by their service and the return is virtually the same . Yes they are vultures and leeches but they invented a system that took the industry by storm and gave the public confidence in booking forward their needs

  2. Andrew North says:

    Given that this doesn’t seem to have received any publicity outside of the accommodation industry, the whole think is
    moot.

    The OTAs will go on creaming off billions, our government will let them (not hard to figure out why) export all the money to America and we will keep having our customers hijacked by the vultures and the leeches.

    My experience has been that the OTA customer feels no connection with the accommodation provider so does not care how much of a mess they leave etc. Whereas a customer you have had a direct connection with, say because they phoned and you had a chat and found out their needs and desires, gave them some tourist info etc, is far less likely to abuse the property. That customer is also far less likely to have a monumental whinge because they don’t feel ripped off as they haven’t paid 12% commission or more and thus an inflated price.

    We no longer accept bookings from Tripwhinger, life is so much more pleasant, we have noticed no decline in occupancy, but especially, the narcissists that all congregate there are hassling somebody else and not us. Best decision we ever made!

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