“Strangled for their basic existence”: The city fighting back over OTA commissions

An Indian tourist hub which flourished as a cultural centre under six centuries of dynasty reign has decided it won’t be ruled by OTAs.

All 400 hoteliers in Mysuru, a tourist city in the state of Karnataka, have decided to regulate their terms of operation with online travel agencies and aggregators, putting an end to what they have termed ‘exorbitant commissioning’ and ‘deep discounting’ tactics.

At a meeting last week, president of the Hotel Owners Association, Narayana Gowda, said that there was a need create a regulatory framework to protect the hospitality industry from predatory policies.

“These online channels entered the market under the guise of helping hotels in effectively increasing occupancy rate and revenues,” he told local media.

“But in effect, in their zeal to garner market share with seemingly unlimited funds, they have ruined the pricing and profitability balance by offering indiscriminate discounts to the customers and largely offsetting those discounts by levying high commissions.

“Hijacking the property online and offline brand, hiding of actual customer rates, pitting one hotel against the other for their benefit are some of the unfair strategies adopted that has collectively impaired the industry.

“These practices have inordinately increased the occupancy at a drastically reduced average price, resulting in high operating expenses. Such economics have a negative impact on the business profitability and the hotel industry is now strangled for their basic existence.”

The association decided travel agent commission should be restricted to 15 percent for ‘pay at hotel’ bookings and 18 percent for prepaid bookings, while any other means of increasing commission via schemes like performance-linked bonuses, and visibility boosts should be discontinued.

Discounting, members agreed, can only be offered by hoteliers and not OTAs.

Mysuru, some 145km from Bangalore, was the capital city of the Kingdom of Mysore for nearly six centuries from 1399 until 1956 and for much of that time was ruled by the arts-loving Wadiyar dynasty.

Known as the ‘cultural capital of Karnataka’, it is famous for its heritage architecture, artisan produce and Dasara festival celebrations.

All 400 hoteliers in Mysuru have agreed to block inventory to those OTAs failing to adhere to the terms put forth by the association after February 15.

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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2 comments

  1. Avatar

    Great idea. If only everyone in this town would agree to boycotting OTA’s. People will still come to the town and either call or use our own websites.

  2. Avatar

    The Australian industry couldn’t work together like this if their lives depended on it, which sadly it probably does. The international OTAs know this full well and have been exploiting our collective weakness for years. Bricks and mortar travel agents who actually paid Australian staff, paid Australian taxes and actually provided a service survived well on 10-12% commissions. Now we have international giants employing the lowest cost international call center staff, dodging every tax liability and contributing zero to the local economy squeezing operators for 15-25% commissions and this is normal?

    In what other industry does a technology come in with lower operating costs on every metric – yet result in higher costs to its users – both business and consumer? Marketing has truly won over truth in this instance.

    Australian accommodation operators have been failed by government at every level, failed by their industry organisations and continue to be exploited because they don’t have the time to organise anything beyond day to day survival.

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