Did ACCC clamp down hard enough on OTAs? Industry responds to “hidden arrangement”

Tourism Accommodation Australia and Accommodation Association of Australia have both expressed concerns about the recent agreement between the Australian Competition and Consumer Commission (ACCC) and Online Travel Agencies (OTA) – and Expedia – in regard to restrictive price practices.

In a statement on Friday, ACCC chairman Rod Sims said: “The ACCC commenced its investigation after accommodation providers raised a range of concerns, including that these parity clauses were anti-competitive as they stopped consumers from getting different prices from competing online sites. Australian accommodation providers will now be able to tailor their offers to better meet the needs of their customers and their own businesses requirements. They will now be able to offer lower rates through telephone bookings and walk-ins, offer special rates and deals to customer loyalty groups, in addition to offering deals via Expedia and”

Accommodation Association of Australia CEO Richard Munro responded: “The accommodation industry has significant concerns about an agreement that has been reached between the ACCC and the two offshore-based companies who command around 80 percent of the online travel agency market in Australia.

“From what the Accommodation Association understands – because the ACCC has not made public the agreement – Australian consumers will be worse off under this hidden arrangement – we estimate consumers could still be paying up to 20 percent more for a room because of the secret commissions that are charged by these offshore global bohemoths.

“By far the biggest concern is that operators of accommodation businesses are prevented from advertising on their own websites a lower room-rate than what these online travel agencies display. The ACCC has seemingly overlooked the fact the internet is easily the number-one way consumers book accommodation.

“Effectively, this means the online travel agencies can still dictate – from their offshore headquarters – to small motels in regional Australia what price they can charge for providing a service, when many of these accommodation businesses are struggling to be profitable. We would be keen to learn how many such operators the ACCC met with before reaching the agreement with the online travel agencies.

“With their dominant market share, the two major offshore online travel agencies are squeezing Australian accommodation businesses and Australian consumers will ultimately be the losers through higher prices or worse still, less choice because smaller operators in regional areas could be forced out of business.

“Another concern our members have raised is in communication received from one of the online travel agencies in question about this issue last week, the terms and conditions of the contracts between accommodation operators and the online travel agency state the contract ‘shall be exclusively governed by and construed in accordance with the laws of the Netherlands’.

“We would like to think Australian Consumer Law applies to transactions made by Australian consumers within Australia for accommodation booked at an accommodation business which is physically located within Australia.

“Given all of this, we are calling for the ACCC to make public all agreements and communication between it and online travel agencies. The Accommodation Association has been seeking to meet with the ACCC since September 2015 to discuss these issues, but requests for a meeting have not been responded to.”

TAA CEO Carol Giuseppi also responded: “TAA welcomed the chance to be included in discussions with ACCC, but has advised ACCC that in its view the agreement doesn’t go far enough to protect hotels and consumers.

“While the decision that hotels no longer have to give OTAs the same availability of rooms was welcomed, TAA advised the decision to allow OTAs to prohibit hotels from offering lower rates online clearly lessened competition and was detrimental to hotels and travellers.

“We advised the ACCC it should have insisted that OTAs allow hotels to set their own rates online. Hotels will only be able to offer cheaper prices than an OTA over the phone, over the counter or via a loyalty club.

“Smaller hotels in particular feel very vulnerable to the power of the global OTA duopoly. The ACCC needs to send a stronger message to these two global giants to ensure travellers’ interests are protected.

“Over the past year a number of hotel groups have committed to providing members of their loyalty programs with exclusive rates lower than that offered by OTAs, which highlights the benefits of booking direct with hotels. For consumers, joining a hotel’s loyalty club is the best guarantee of accessing competitive rates.”

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Tony Neale
7 years ago

So our ACCC had secret meetings with overseas based companies (OTAs) and decided on behalf of the Australian Hospitality Industry that we moteliers could not advertise our own rooms on our own websites cheaper than the OTAs. This is our competition watchdog at work looking after the interests of Australian businesses and consumers ? Certainly not their best work.

This means that anywhere online, whether guests book on our own website or an OTA website, guests will be paying the tariff plus the equivalent of the OTA commission amount. That’s inflating prices, reducing competition, enabling OTAs to fix prices. How is that benefiting the consumer ?

ACCC should not attempt to sit at a negotiating table without some hospitality industry advisors present to assist them through even this most simple scenario. Hopefully they can rectify their massive mistakes and undo the damage.
Tony Neale – Motelier and Statewide Motel Brokers

Reply to  Tony Neale
7 years ago

Talk about a wet lettuce leaf! Since I have run my motel for the past 3 and a half years the prices on my webiste have been lower than the prices I put up to the OTA’s. Never had any negative feedback from anyone.
I am thinking however of putting my website prices up to match my prices on the OTA’s and then giving an immediate $10 per night discount to direct bookings. Nobody seems to mind paying the inflated prices via the OTA.

7 years ago

We run a small family owned motel and we are appalled and disgusted that the OTA’s can dictate to us the BUISNESS OWNER how we can run our business and what we can charge. How can they tell us what to charge in the days of rising costs, our rates and electricity charges are through the roof and we have to pay commissions to these organisations who do what for their commission? When they start paying the bills and assisting with no shows who book through their sites together with providing invalid credit card details so cancellation costs can not be charged. OTA’s take no responsibility when things go wrong and want to tell us how to run OUR business and what we can charge? ACCC and the OTA’s have a lot to answer for especially when it comes to small business.

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