Hotels demand action against OTAs

Hotels are already wrangling with Airbnb and now they’re hitting out at online travel agencies (OTA) in the fight for customers.

According to a report from the SMH, hotel operators are demanding the Australian Competition and Consumer Commission (ACCC) regulate competition from global titans Expedia and Priceline, who own Booking.com and Agoda as well.

Hotels are calling for these OTAs to abandon the practices of ‘price parity’, last room availability and ‘brandjacking’, writes SMH.

In a submission to a consultation launched by the ACCC, the Accommodation Association of Australia (AAA) said the playing field was imbalanced and needed rules to operate fairly, particularly after Expedia’s acquisition of Wotif.com Holdings last year.

Both Expedia and Priceline have raised their commission rates by 3% to 15% after the takeover of Booking.com and Agoda, and also push hotels to sign up to ‘price parity’, otherwise known as a clause that prevents them from offering lower prices than is offered through OTAs.

AAA polled hotels, however, and 90% of them said they would offer lower rates for booking direct, or even added perks like free brekkie or a late check-out if they were allowed to do so.

Per SMH, AAA chief exec Richard Munro said it was difficult for hotel oeprators to boycott OTA terms and conditions, as they hold a monopoly on their bookings, as much as 40% in some cases.

“You are either in or out of the program,” he told SMH.

“I think that is a really unfair advantage a bigger company has over those smaller businesses. They have to comply with those terms and conditions or not get any business.

“And when your business relies on [online travel agents for] say 40 per cent [of bookings] if you lose that, you can imagine how devastating it would be on any business.”

The contracts also require hotel operators to offer their last available room through online travel agencies, further preventing the hotels from profiting or holding these rooms for particular clients.

The AAA is also demanding that the ACCC to look at the practice of ‘brandjacking’, where online travel agencies bid against the hotel operator for rights to pay-per-click Google AdWords in an online auction, according to SMH.

This essentially means that agencies show up more prominently in an online search, however pushes consumers to then book through an OTA rather than directly through the hotel itself.

Munro also told SMH there was nothing to stop Expedia and Priceline from jacking up commissions even further, saying OTAs are taking advantage of their major role in the industry.

“We actually respect that OTAs have a function,” he said.

“We are not here to pour hot water all over the OTAs, [but] the balance is out of whack at the moment. It has gone too far towards these offshore entities.”

SMH reported that Expedia was willing to comply and work with the ACCC with its inquiries.

“The result has been a marketplace where accommodation providers gain global exposure to consumers who find value and efficiency in shopping for travel through our world class travel brands and our significant investments in marketing and technology,” a spokesperson said.

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

Latest comments

jean says:
October 7, 2015 at 3:46 pm
I’m amazed that hotels are now complaining about an issue they created in the first place. When you don’t differentiate between an agent, ground operator, OTA and wholesaler then this is what you get. Now let’s see if they can get themselves out of this massive problem. Good Luck!
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sting says:
October 7, 2015 at 3:34 pm
….woe is me.. hoteliers complain about commission and parity clauses and yet they are prepared to pay thousands of dollars annually to trip advisor and gains nothing, if ever a very tiny bit from it…. jees please, demand more for what you pay for…look, trip advisor actually promised you upon signing up that all your contact details phone, fax, email, website will be on your listing only to find out you hardly see those important details to get travellers book direct… what is so prominent on your listing is a big box for users inquires about rates….and guess who comes up in the box, the otas of course who else… not even the property’s rate comes up in the box even if you have paid for the business listing worth thousands of dollars a year….. you know why… because hoteliers will still have to bid for a place in the box against the ota giants who’ve got more budget for it…in other words you have to pay more on top of your annual fee for nothing…. trip advisor is not a fair game website…no, not for the hoteliers neither for the travelling public… because if not all hotels are paying for the business listing then it is more likely the game is lopsided against those who did not pay …not in the above manner but in the ranking and rating game…. how?… hotels who paid for the listing have a higher chance of getting their bad reviews deleted…that’s how… so if you travellers think you are getting a fair and honest rating of a property on trip advisor then you are grossly mistaken… trip advisor is not an embodiment of a moral and just website… trip advisor is a lie and worse, hoteliers are paying for it…
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