Expedia CFO argues for price parity as ACCC investigates complaints
While the Australian Accommodation Association (AAA) claimed OTAs threaten to remove hotels that refuse to comply with current price parity rules, Expedia’s chief financial officer, Mark Okerstrom, told The Age Expedia was “not generally threatening them”.
Since France banned rate parity clauses in OTA contracts a couple of months ago, Australian hoteliers have been calling out for similar regulation.
In response, the Australian Competition and Consumer Commission has launched an investigation into the matter.
Mr Okerstrom informed The Age: “What we do find is that hotels that give us the best prices generally perform the best on our websites because our search algorithm will dictate what hotels are in what position.”
“They are dictated by what consumers like and what consumers look at and what consumers click at. And consumers often shop at five to 15 different websites before they actually book. So if you don’t have the most competitive price on our platform, consumers aren’t going to pick it and those hotels often lose share to those who give us the best price.”
One of the major complaints made by accommodation providers against OTAs involves rising commission. Since Expedia’s 2014 acquisition of Wotif, commissions increased from 12 to 15 percent, causing many to panic. However, Expedia claimed that commission rates fell around the time of the deal and were then raised back up to 15 percent.
According to The Age, Mr Okerstrom admitted he could “never” promise there wouldn’t be another rise in commissions. “One of the things we are able to offer to hoteliers though is a much more value based margin structure.”
“We are giving hotels opportunity for example to get more exposure and more differentiation. In different geographies or different products they can pay a little bit more if they see value in that. I think you’ll see more of that in the future. We want to be charging for value rather than just for the sake of charging.”
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