Saturday, November 17, 2018

The double standards punishing mum-and-dad operators

The national competition watchdog stands accused of double standards over its failure to stop online travel agencies dictating accommodation prices.

The Australian Competition and Consumer Commission (ACCC) has failed to stop online giants Expedia and Booking.com demanding price parity from accommodation providers, according to the industry’s peak representative body. 

The Accommodation Association of Australia (AAA) says the practice continues across hundreds of accommodation businesses, yet the ACCC took legal action to prevent Flight Centre enforcing a similar policy with airlines.

Expedia (responsible for Expedia, Wotif, Hotels.com and Trivago) and the Priceline group (Booking.com), together command almost 85 percent of online accommodation bookings in Australia and have a pricing parity requirement built into contracts with accommodation businesses.

AAA CEO Richard Munro said: “The accommodation industry continues to scratch its collective head about the actions of the ACCC.

“It has expended a huge amount of public time and resources in pursuing Flight Centre over parity pricing all the way to the highest court in the land.

“Yet parity pricing requirements by two giant offshore online travel agencies have been allowed to run rampant for several years, creating havoc in the accommodation industry and costing local jobs.

“What’s more, in one of his most recent statements on this issue, the ACCC’s chairman said the existing regime for the accommodation industry allows consumers to shop around to get the best deal.

“How can Australian consumers get the best deal when the likes of Expedia, Wotif, Hotels.com and Booking.com are preventing operators of accommodation businesses from advertising lower room-rates on their own websites than those displayed for the same room on Expedia, Wotif, Hotels.com and Booking.com?

“And for any accommodation operator who doesn’t comply with this, they are threatened with being ‘darkened’ on the websites of these online giants.

“Or if operators choose to sever ties with these online giants, many operators find the online giants have used their deep pockets and internet expertise to buy out the names of their accommodation business on major search engines.”

The AAA has called for the ACCC to pursue an active ban on parity pricing in the accommodation industry.

“What makes these dubious practices even harder to comprehend is they are being undertaken by companies which keep jacking up commissions paid by accommodation operators, employ very few Australians and pay very little, if any, tax in Australia,” said Mr Munro.

“This is in stark contrast to, for example, a ‘mum-and-dad’ motel in regional Australia which supports its local community by employing local people, pays taxes and council rates to governments and enthusiastically welcomes visitors from around Australia and all over the world.”

About Kate Jackson

Kate Jackson
Kate Jackson is the editor of Accomnews. You can reach her at any time with questions or submissions: [email protected]

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11 comments

  1. The solution is to “value add” to the “package” sold direct on their own website – make it a different product that that offered by the BIG OTA’s – then there is no comparison – and the package can be sold at any rate (including lower)

  2. I feel everyone is missing the mark with this repeated discussion. Let’s not forget that the travel agents expend serious dollars in promoting an accommodation property, at zero upfront cost to the accommodation supplier, only to lose 4 out of 5 visitors as a result of the bill board effect. If hoteliers took the time to invest in a good website and booking technology of their own, they should be able to convert at least one of these bounced bookers. With good remarketing tools perhaps all 4 could be captured, resulting in a cost of acquisition of only 3% – 5%. But hoteliers don’t want to put the effort into marketing and then complain that those taking the risks insist on price parity so they at least stand half a chance of converting a booker they’ve paid for. Price parity is simply not the problem. Pricing itself is the fundamental cause of this unrest. Time for the industry to own it.

    • Hi Travelion and Kim,

      We invested very heavily in our own Website, about 6 months ago, but as a small independent accommodation provider no one sees our website as it sits at page 3 in search results. Page one and two are full of OTA sites, for our location, followed by the large multi national companies like Quest, Oakes etc who pay google for their prime positions.

      To be blunt, packages we have offered on our website have not worked, nor has specials, including our current Stay 4 pay 3 deal, as no-one sees them. If you aren’t on page 1 of google, it doesn’t matter what you offer as nobody sees you.

      The issue is much bigger than Rate Parity, it’s about cutting the independent operator out all together.

      A recent seminar I attended said offer your guests something different or unique compared to the OTA,s. Great idea, but who will see we what we offer if our website is sitting on page 3 of Google.

  3. Hi Kerryn
    Thanks for jumping in here. This is where the bill board effect comes in to play and overtakes Google. All the OTA’s spend big on Google and their own in house marketing teams to make sure they are everywhere. This costs you nothing. But customers find your property via the OTA so you could think of the OTA as a ini Google. Approx 80% of guests bounce off the OTA site to check out the hotels direct site or even other OTA sites to try to get better pricing. This is where your specials come into play and are visible to the guest that came to you with compliments of the big players at zero cost. Looking at your site I would recommend having a call to action on the home page such as TODAYS SPECIAL etc that takes them to a private form that has a special deal for them, maybe lower price but bundled with breakfast, or fruit basket and wine thrown in etc. This may help your conversion rate. I don’t think we can pin cutting the independent operator out altogether on the OTA. They want you to stay in business as they need stock and you pay them higher commissions than the big players. I think you can thank the Mantras, Oaks and Quests of the world for this not the OTA’s!

  4. Small Independants band together and educate people to seek accommodation direct websites if they want the best deal. Then offer a great direct booking deal. Also start with those already staying with you – offer an incentive next time they book to book direct. Something they can take away with a code so you know they are return guests. Tell them to pass it onto friends. Utilise Tripadvisor special offers as well. Advertise using social word of mouth networks…It is hard work but it can be done….

  5. There is a Blockchain solution. Its very early days but I think it will lead to good things.

    Lockcoin.co

  6. Oops. Lockchain.co

    We are stuck between many cartels and need to fight!

    • Not only do they do all of the above they are undercutting using their large commissions to be less than at parity. Not everyone is aware of this. We still pay the commission and they use part of it to undercut us.

  7. What about the OTA’s offering a lower price at times, how is this parity.

  8. Lockchain is a good concept and one of many new block chain platforms currently being built.

    I agree with Aldy that the OTA’s using their commissions to negate their own price parity rules is a little unfair but perhaps this shows some form of desperation. Maybe they are not fairing as well as they would want us to believe.

    I have heard whispers of a new form of booking site in the wings (not OTA as such) that is offering listings only to independant hotels and guaranteed never to let the big chains such as Mantra etc list. Any one know who this may be?

    • Why promote an overseas company like Lockchain when there is perfectly good start-up direct booking company that has just launched in Australia. More importantly, no commissions, a direct booking loyalty system that looks like it has no time or financial cost to the property owner, a direct booking resource bank, direct booking seminars and even more ideas are coming. 100% Australian owned and everything we have all been after for years. Check out GOREZ

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