Damaging impact of OTAs

Giant global online travel agencies are having a corrosive impact on accommodation businesses, according to the results of a new industry survey.

 The Accommodation Association of Australia recently undertook a survey that is indicative not only of the impact to Australian hotels, but hotels around the world. 

 The Accommodation Association of Australia annual survey of accommodation businesses, which drew more than 400 responses, found that:

  • The single most concerning issue to accommodation businesses was online travel agencies (which include and Expedia);
  • Only 41 percent of respondents saw an improvement in the economic performance of their property, 28 per cent reported economic performance stayed the same, while 27 percent said economic performance had declined; and
  • For operators whose economic performance has declined, the single biggest factor contributing to this decline was competition from online travel agencies and other operators.
[pro_ad_display_adzone id=”27469″ align=”left”]The Association’s chief executive officer, Richard Munro, said: “Our Annual Survey continues to provide an accurate snapshot of the views of operators of accommodation businesses across Australia and therefore, it is extremely helpful in determining the Accommodation Association’s priorities.

 “The clearest message from this year’s survey is the damage that giant global online travel agencies are doing to accommodation businesses, many of which are small businesses which are major employers in their local communities.
 “This distinctly contrasts with the likes of offshore giants and Expedia, which are making millions of dollars each year from our industry, yet they employ very few staff in Australia. 
“What’s more, most – if not all – of the profits these global behemoths are making flow straight overseas and they pay little or no tax in Australia, unlike local accommodation businesses.
 “On behalf of our industry, the Accommodation Association will continue to push for major reforms to online travel agencies in 2018 which rein in their free-riding on Australia’s accommodation and tourism industries.”

 Other notable results from the annual survey include:

  1. The second most concerning issue to accommodation operators is the lack of regulation of non-compliant accommodation, e.g. Airbnb; and
  2. The biggest workplace relations concerns are public holidays and penalty rates.
“The recent changes to penalty rates have allowed important parts of accommodation businesses, such as restaurants, to trade more frequently instead of being closed due to the cost of wages being unviable for operators,” Mr Munro said. 
“Any move to roll back these changes will have a direct negative impact on local jobs and services provided to visitors.”

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Andrew North
Andrew North
6 years ago

Until accommodation operators all start writing letters of complaints to our Prime Minister, Minister of Taxation and Minister for Communications NOTHING will change.

If you are happy to have the OTAs skim a minimum of 15% off your income, then keep being lazy and don’t do anything.

Sue Florance
Reply to  Andrew North
6 years ago

How about some sort of form letter to help us write about this problem. I had no idea that these businesses pay little or no taxes here in Australia. I am a very small accommodation business and without these OTA’s I would not survive ….. I am not happy with paying 15% or more in some cases, however to generate business for my small business I need these OTA’S, don’t forget they do all the marketing which I could not possibly afford to spend to generate the same level of $’s the do for for my very small business.

Andrew North
Andrew North
6 years ago

Sue – you have it wrong. Without the OTAs blitzing TV and the internet your customers would easily find you using the organic route of search engines. ie. the search engine itself would find you.
Do you realise that the OTAs pay $millions to the search engines to put their “preferred” customers at the top of any search?
This means your organic result gets pushed further down and (for them) hopefully onto the 2nd page of the search results and thus out of sight.
That way, they hijack the search results away from you, then you have to pay them to hijack customers to you.
I have been doing accommodation since the early days of the internet and I can assure you that until the OTAs and their mega budgets came along, Joe Public was quite able to locate places to stay.

Andrew North
Andrew North
6 years ago

Tripadvisor just sent me an email. If I want my business contact details to appear on their site I have to pay them $899!!!

Vicki Hayward
Reply to  Andrew North
6 years ago

Andrew, I’m not sure where you are but (in Australia) we are expected to pay in excess of AUD 1800 annually for a business listing on TA!

Lloyd Milewski
Lloyd Milewski
6 years ago

The local industry has to act as one united block to defend ourselves against these OTAs. First, we should insist they display one paragraph of the property’s terms and conditions that can only be edited by the property. Secondly, we should devise an extranet format that the OTA is forced to connect to in order to update their availability. All OTAs would have the ability to connect to these individual extranets owned by the hotels or get no information, no pictures, no availability. This way all the OTAs would get the same information feed and would have to compete with each other. New OTAs would be able to spring up with minimal programming. OTAs are just marketing companies after all. We own the information, they should work hard to make the best of our information.

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