Is Australia about to ban rate parity clauses?

Australia may be close to a legal ban on the rate parity clauses imposed by online travel agencies, following a landmark Swedish decision to end the practice.

According to the Accommodation Association of Australia (AAoA), our national consumer watchdog is currently investigating the “conduct and practices” of offshore online travel agencies, including rate parity.

“We do not know when this investigation will be complete but can confirm that many of our members have cooperated with the Australian Competition and Consumer Commission with the investigation,” said CEO Richard Munro.

A commission spokesperson confirmed: “The ACCC is continuing to investigate the conduct of online travel agents in enforcing price and availability parity requirements with Australian hotels and accommodation providers.

“The ACCC is considering their effect on the relevant market/s.”

At the end of last month, was ruled by the Swedish Commercial Court to have no lawful right to stop businesses offering better conditions on their own websites than those it provided to the online travel agency.

The Scandinavian country follows its progressive neighbours Belgium, France, Italy, Austria and Germany in moving to legislate against parity clauses.

The Swedish legislation, which applies from October, stops (and by implication every other online travel agency) from imposing parity clauses in contracts, but also prevents ranking algorithms taking into account the refusal of hoteliers to agree to rate parity.

Incentives by to apply such clauses are now forbidden under law.

“The uncompetitive nature of parity clauses is more and more recognised by antitrust authorities, courts and policy makers all across Europe,” said Markus Luthe, chair of European industry representative HOTREC.

“The control over the own product and the conditions must remain with the businesses.”

HOTREC CEO Christian de Barrin added: “As the majority of the European tourism market, in terms of room nights, is already free from parity clauses, the rest of the European hospitality industry hopes to soon benefit from these same favourable market conditions as well.”

In Australia, Richard Munro said the AAoA had been lobbying government “to ensure that the operators of compliant accommodation in Australia are able to operate in a fair and financially stable environment that provides consumers with the best rates available”.

Earlier this year, he said the organisation would “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”.

Rate parity clauses contractually guarantee that accommodation providers will not undercut prices advertised on online travel agency (OTA) sites, despite operators paying fees of between 15 and 30 percent for every booking made through the platform.  

They are imposed by OTAs on providers, most of whom who rely on the international platforms for their online visibility.

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5 years ago

Fingers crossed that it happens here as well very soon.

5 years ago

Finally! About bloody time! Why should we be told how we can run OUR business. Hopefully this happens sooner rather than later.

Peter Johnson
5 years ago

Hallelujah! Better late than never.

5 years ago

I was just here in the office doing paperwork and noticed an email from booking dot com for a cancellation for a 2 night booking in Oct. Then another arrived at the same time booking the stay for the same dates. I called the guest and said I have these confusing messages from booking dot com. A friend had given the guest a link and if she used that link at booking dot com she gets a $25 credit. I told her that it’s cheaper to book direct anyway but couldn’t sway her to cancel and rebook with me.

How dare these bloody overseas companies have the gall then to tell us we have to charge the same price. 2 sets of rates all the way people!!!

Reply to  Maurice
5 years ago

We had a lady come in and wave her phone in front of me saying they get % off their reservation. I knew nothing about it scrolled down to see that there are 3 steps that need completing and let her know that it not something we do but between you and booking dot come and you need to complete the 3 steps!

5 years ago

I once thought OTAs were a necessary evil that contributed to the stability of our industry.Perhaps even a possible source of extra revenue.Through our own lazy attitudes these companies by charging excessive commissions have developed into cartels that have now become dictatorial.These warts on the industry are now able to say and do as they please by using their BIAS process and DOUBTFUL practices.A ban on PARITY CLAUSES is just the start and should be introduced immediately.A thorough investigation into ALL their activities is urgently needed.

5 years ago

We have been required to raise our rates by 15% simply to cover the OTA’s exorbitant 12% commission. So much for the irrational public accepting the media blitz that only OTAs provide the lowest rate and dealing with an unnecessary third-party. The ACCC has proven again it isn’t a watchdog, but a disgraceful sleeping dog, as it takes only minutes to recognise the economic plunder and violation of an owner’s rights when bullied by national oligopolies as Europe has repeatedly done, so why the delay, now the year end?! I laugh when these OTAs refer to themselves as “partners”, rather than the parasites they are with only automated guest dealings. When you subtract their 12% commission, the 3% bank & credit card fees, and the 10% GST, owners are netting only 75% of their daily rate while guests often score lower on these OTAs for their “value for money” reviews as the Oz consumer fails to understand or want to consider the situation. Soon I will sell and move to another country ridding myself of being associated with this industry and poor government and economy.

Andre Els
Andre Els
Reply to  Jim
5 years ago

Hi Jim,
I note that you mention the OTAs charging 12%. Try Agoda, who are charging 15%.
What a bloody Rip Off.
Regards. Andre.

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