Snub OTAs, book hotels direct: TAA

Qantas’ Hooroo is the latest OTA to jack up commissions, a move pre-warned by industry bodies that opposed a condensed online marketplace.

The hotel industry is up in arms after Qantas’ Hooroo says it will jack up commissions from 10% to 13% on July 1.

The move could represent an increase of up to 30% in cost of sales for hoteliers, and is expected to hurt the viability of smaller regional hotels, motels and B&Bs that rely heavily on OTA bookings.

As fallout from the announcement, Tourism Accommodation Australia (TAA) is throwing down the gauntlet, urging consumers to go direct and avoid booking via online travel agents, claiming OTA commission increases will eventually drive up hotel rates.

Last year TAA warned the ACCC before it approved Expedia’s takeover of Wotif of the possibility of a few major OTAs taking control of the online space.

Following the $703 million takeover, the online travel market is now dominated by Expedia and Priceline and together, accounts for some 85% of the Australian market.

As predicted by the TAA before the takeover, Expedia subsequently increased Wotif’s commission levels from 12% to 15%, as did Priceline’s Agoda, and now Hooroo has followed suit with its commission hike.

“What is annoying is that we predicted at the time that the takeover of Wotif would lead to a surge in commission charges, and that’s precisely what has happened,” TAA acting ceo, Carol Giuseppi, said.

“While we had an independent Wotif, it helped maintain more moderate commission levels, but the takeover of Wotif has precipitated an opening of the commission floodgates.”

Giuseppi said TAA will be taking up the issue with the ACCC “to scrutinise” local OTA’s to ensure they do not follow suit of European and US trend of over 20% commission levels, “otherwise the Australian hotel and tourism industry’s growth potential will be seriously stymied and consumers will pay considerably more through lack of competition”.

Giuseppi said ultimately consumers would end up paying higher prices as a result of the sharp commission increases, though hotels would also suffer as well.

“Unlike OTAs, our industry is highly competitive and is set for a massive increase in supply over the next few years, which will mean that some hotels will have to absorb some of the increased commission charges,” Giuseppi said.

Giuseppi said small regional hotels, motels and B&Bs who do not operate their own booking engines would “suffer most” as a result of the commission hikes.

“For many of them, a 3% increase in commission levels can represent an increase of up to 30% in their total sales costs with the potential for further increases highly likely,” she said.

“We would encourage consumers to book directly with hotels to prevent significant future price increases and secure more value.”

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Latest comments

sting says:
May 28, 2015 at 2:54 pm
… i guess it is not enough to encourage consumers to book directly to the property… hoteliers should get united and put up their own website to compete with otas… it will be funded by all participating hotels paying monthly dues… a website that will feature lead in hotel room type rates for all properties and all contact details of hotels displayed such as address, phone numbers, fax, emails and websites which are lacking on all ota websites… hotels would also be encouraged to promote the website to their guests…
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Peter Hook says:
May 28, 2015 at 1:51 pm
Of course, we are not urging consumers to avoid travel agents, because high-street travel agents do a brilliant job and work very well with hotels, but what we would urge is for consumers to shop around and ensure the money they spend is going directly into the product rather than into sustaining the very expensive marketing campaigns of OTAs.
Peter Hook, Tourism Accommodation Australia
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