Industry leaders are urging Australia’s dominant online travel agent to follow Expedia’s lead and end rate parity clauses in its contracts with Australian accommodators.

Industry on tenterhooks over Booking.com parity drop

Industry leaders are urging Australia’s dominant online travel agent to follow Expedia’s lead and end rate parity clauses in its contracts with Australian accommodators.

Booking.com has remained silent on the issue of rate parity, despite repeated requests from AccomNews for comment over the last three weeks.

The move by rival bookings giant Expedia to abandon its rate parity agreements with Australian providers has been widely, if cautiously, welcomed by industry players this week.

Until now, operators looking to list rooms through the platform have been contractually required not to undercut Expedia on their own website pricing, despite paying 15-25 percent commission on any bookings made through the OTA.

“It’s a positive move and shows that Expedia are listening to the market and doing something about it,” said Trevor Rawnsley of the Australian Resident Accommodation Managers Association.

“At ARAMA we disagree with other organisations on their prohibition approach towards OTAs.

“We love the OTAs but they are an advertising portal and we are the client. The advertiser cannot take control of the client’s pricing structure”.

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Rawnsley says it’s “about time” Booking.com “comes to the party” on rate parity.

“They are the market leaders by far, it’s crucial,” he said.

“ARAMA considers this latest development a step in the right direction but by no means a final victory and we look forward to a positive response from Booking.com.

“What the industry wants is to work together as partners with Booking.com. We would jump at the opportunity to meet with them and discuss the bigger issues.”

Chris Fozard, operations manager of the Budget Motel Chain, says his members are asking for the same outcome.

When canvassed for reactions to the Expedia announcement, member replies included: “Does not make a difference until booking.com follows suit”, “The majority of our business is Booking.com and that’s the one I am hanging out for” and “I think it is a step forward, let’s see if Booking.com will follow”.

Chris said: “Although the Expedia Group has stated that they will no longer enforce their rate parity clause, which is great news, property owners across Australia will not be able to fully take advantage of it until Booking.com follows suit.

“Having a higher price on Expedia’s websites (even to cover their commissions, for example) will mean that any guest who is ‘shopping around’ for the best price will see the lower rate on Booking.com’s sites and use them.

“Booking.com has a great opportunity to show that they value their Australian partners and follow Expedia’s lead, before being forced to remove their rate parity clause by the ACCC.”

Others have questioned whether Expedia intends to ‘darken’ properties not displaying their lowest room prices through the bookings portal, making them less visible in an online space dominated by the two US OTAs.

Rawnsley, who credits ARAMA’s strong advocacy as a factor in Expedia’s announcement on rate parity, says “only time will tell” how the OTA intends to treat members displaying lower prices on their own websites.

“The OTAs’ dirty tactics of darkening people for not doing what they want is abhorrent. But Expedia is at least making the right noises, it’s a marvellous outcome,” he said.

Budget Motel operators have echoed Rawnsley’s cautious welcome.

“It is a fantastic result BUT as mentioned we need someone checking that we are not being disadvantaged if we raise our tariffs on their site,” said one.

“The big question for me is, ‘how to drive guests to our own websites’? As the big OTAs are always ahead of the game on google,” argued another.

Other comments have been more openly positive.

“It is great news. The work behind the scenes has been amazing. We all appreciate the efforts by everyone,” said one operator, while another added: “I think this is a big break through, it allow us to breathe better and start to run our businesses, not by dictation and demands from the OTAs, but by how we see what is right for us.”

Expedia’s decision follows sustained industry lobbying over rate parity clauses, an announcement by Labor that it will ban parity agreements if elected to government, and the impending results of an Australian Competition and Consumer Commission investigation into OTA practices.

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

    It’s irrelevant that Expedia has sent out this message. They have advised they will continue to use their Quality Score in the backend to determine sort order.

  2. Kate Jackson

    From: Charles Ikstrums
    Chairman
    Budget Motel Chain

    Whilst the announcement by Expedia is welcome, particularly for smaller family operated properties, one must ask why Expedia (and ultimately Booking.com) willingly embraced Rate Parity in Australia for so long.
    The main questions for these small operators are; –
    • What can we learn from the overseas experience?
    • Has the removal of Rate Parity increase traffic to the property’s own website and thus increased direct bookings and to what extent? Overseas experience points to an approx. 10% increase in direct bookings.
    • How have Expedia and Booking.com reacted to the removal of Rate Parity and what new strategies have they implemented to minimise any effect on their bottom line?
    • Assuming Expedia and Booking.com have gathered data about the effects of removing Rate Parity from their contracts, will they attempt to use this to devise new ways of maintaining control over the Accommodation Industry?
    We then need to look at ourselves and how we react.
    Do we immediately reduce our own online price by the commission rate we are charged? Or, do we reduce our prices by a smaller margin to avoid the potential of our property being “darkened” on the OTA sites?
    Some properties have had their websites built by the OTA’s for “free” and pay an increased commission rate for this service. There are also properties that still do not have any web presence. Will these operators spend money to build their own site or continue with the status quo?
    With Expedia and Booking.com providing in excess of 60% of business to some properties, will these operators want to upset them by lowering their prices compared to the OTA’s?
    We believe each individual property must look at how the removal of Rate Parity may affect them and their business and make decisions based on that. There is no “one size fits all” answer, but at least we now have the freedom to make that decision for ourselves.

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