OTAs using “brutal” new tactics to drive down room rates

Expedia and are forcing price discounts on Australian accommodation operators in an aggressive new push condemned by industry leaders as immoral, damaging and akin to extortion.

The US online travel agents, which together control the vast majority of online bookings worldwide, are pressuring operators into either setting discounted rates or matching the lowest rates of competitor OTAs – and threatening to ‘darken’ those that don’t comply.

The Australian Resident Accommodation Managers Association (ARAMA), which has always maintained there is room in the market for OTAs, says the forced discounts are damaging member profits and “leaving a wake of confusion and distress across the management rights industry”.

“Forced pricing parity amounts to nothing but extortion and it should cease immediately,” said CEO Trevor Rawnsley.

“This is a brutal way to compete on price with competitor OTAs.

“Overseas based online travel agents may claim to be acting in your best interests, however forcing discounting and rate parity is clearly detrimental to the industry.

“Consumers will not be any better off.  A race to the bottom on price just to beat up another overseas-based competitor is unsustainable and will affect service and quality in Australian tourist accommodation.”

Both Expedia and are guilty of attempting to dictate the room rates set by operators, says ARAMA. has introduced Booking.basic, which seeks to always offer the consumer the lowest rate in the market – often using rates initially bundled as special deals for wholesale distribution and not designed as a standalone price. then uses that rate as a guide for parity which an operator is contractually obliged not to undercut online, and which other OTAs use as a guide to demand parity from the same operator.’s early payment discount, often advertised without operators’ knowledge because the OTA funds the discount, similarly allows competitors like Expedia to demand rate parity.

Expedia will likewise set up discount campaigns which offer promotional opportunities to those operators who agree to lower their nightly rates and pay a higher commission. Those that don’t participate are given a lower profile by Expedia online, while those that do participate are opened up to competitor demands for rate parity.

Smaller OTAs also compete to offer discounts – like Agoda which offers upfront cash loans in return for discounted rates – creating more pressure for rate parity.

Operators not complying with these demands for parity are routinely threatened with ‘darkening’, which means decreasing the online visibility of a property which fails to comply with a ‘quality score’ set by the OTA.

The following is Expedia’s response to a discounted rate for one property: “This discount is impacting your competitiveness on our channels and will begin to negatively impact your quality score (which we would really hate to see happen).

“As a result, this will decrease your visibility to our customers and impact their decision to book with your property.”

For operators with group clout, such as large hotel chains, there is an opportunity to negotiate with the OTAs for a better deal.

And for those with a high percentage of business generated and cultivated through direct bookings, the effect of darkening can be minimalised.

But for mum-and-dad operators, who generally rely on OTAs for online visibility, the consequences of non-compliance could be ruinous.

The Australian Competition and Consumer Commission (ACCC) has failed to act on regulation of OTAs in Australia, despite a long-running investigation into OTA practices and sustained industry pressure to end parity clauses imposed on operators.

Richard Munro, CEO of the Accommodation Association of Australia (AAoA), is among those pushing for ACCC action on rate parity and says he is “certain” of a positive response from the consumer watchdog this year. 

“Banning narrow and wide rate parity in Australia must happen in 2019,” he said.

“The AAoA consider the disproportionate market power of OTAs to be the biggest challenge to our members who are paying extraordinary commissions to these foreign multinational companies.

“The AAoA have now formed a taskforce to deal with this issue and other impacts to rate distribution such as rate leakage from wholesale rates which is linked to OTAs.”

Carol Giuseppi, CEO of Tourism Accommodation Australia, is particularly critical of’s approach to parity through Booking.basic.

She said: “We are very concerned at this latest development from which contravenes hotels’ understanding of rate parity. 

“It has been introduced without consultation and without transparency.

“Ultimately the move demonstrates that are moving away from seeking to work in partnership with hotels to more aggressively pushing their own brand at the expense of hotels. 

“We have provided the ACCC with the evidence base that shows that is often contravening rate parity with the above actions.

“The message for visitors to ‘book direct’ has never been more important to reinforce. Accommodation providers, as owners and operators of the asset, should be in control of their pricing.”

Trevor Rawnsley is urging ARAMA members to evaluate their marketing practices to limit exposure to OTAs and has produced a step-by-step guide for members on how to put a stop to forced discounting. 

“Our operators, mostly mums and dads, are caught between these huge overseas-based OTAs who are duking it out for market share and the only way we can protect ourselves is to raise the nightly rate to try and cover the additional costs,” he said.

“This means the consumer is paying more so it is a lose, lose for the tourism accommodation provider, a lose, lose for the tourist and a win, win, win for the overseas based OTAs.”

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Nick Israel
Nick Israel
5 years ago

It is obvious that the ACCC has put this OTA challenge in the too hard basket when it is a blatant monopolistic game they are playing and it is clear that a commission capping is in the ACCC power to enforce. The various hotel associations have been at odds for many years to convince the regulators to implement a ruling that provides a fair outcome for the Hospitality Industry……..Perhaps a Royal Commission (popular at the moment) is needed to review all monopolistic practices, bullying tactics and especially when the collection of revenue taxes may be at risk and channeled through international protocols. Food for thought…….NHI

5 years ago

I’m surprised how often this misinformation appears and is then published as if it’s gospel. The OTA’s are in business to make money. They are no different than the Wholesalers who controlled the industry before the internet of things, who used to demand prices be set some 18 months in advance. They insisted on allocations and allotments, with only 24 hour release backs, along with serious ramifications if they found you discounted for walk ins because the wholesaler had not sold your rooms. Isn’t this the same price parity requirement only now it’s an openly public request and displayed in contracts as parity and not disguised in any way? The wholesalers charged huge fees for placement in magazines and to appear in their in store advertising, the more you paid, the more visible you became. Isn’t this the same as the OTA’s today. Explain the difference as I can see none whatsoever but no one called the ACCC in to sort it out!

5 years ago

Each time this topic is discussed two things appear common. Rate parity and pricing.
Let’s tackle rate parity first. As per Rachels response above, wholesalers previously charged huge upfront advertising fees almost 2 years in advance. I don’t recall every seeing an invoice from any OTA yet they consistently outlay money on Google Hotels Ads, TV adverts, transport advertising to name just a few, all at their own risk of attracting a booking that earns them a commission. They are purely transactional, no upfront fees. Therefore is it not fair that they ask for some kind of commitment from the accommodation providers to offer the same price on their direct channel to ensure that at the very least they get a fair shot at selling the room to the looker they’ve paid to lure into your space. The internet is one massive open window that can show everything to everyone, so they are taking all the risk and funding the whole advertising journey in promoting your property without asking you to put your hand in your pocket unless they convert a looker. Completely the opposite of the wholesalers of days gone by who wanted to cover their costs and then charge 25% on top. How happy was everyone when the internet finally came to the fore and offered choice so the Wholesalers could no longer command 25% plus upfront fees. Let’s not forget the past!
And now to price. It is in the best of an OTA for the accommodation price to be HIGH. The higher the price, the more they earn. The only person responsible for placing a room for sale on the internet at a certain price is the accommodation provider. The OTA’s do not have access to your Channel Manager to amend the pricing nor do they control what deals you participate in. It is the fear of missing out by the accommodation provider that has forced the prices down, not the OTA’s. The airlines NEVER reduce their pricing just before the flight day and they make PROFIT. They offer deals further out in time, fill their quota of break even seats and then start price hiking. Perhaps it’s time to educate the accommodation industry that if customers want a deal, they need to book in advance, commit to non-refundable in exchange for the low price or pay more closer to arrival. This practice would solve the issue and give us something interesting to comment on for a change! Stop worrying people will stop booking their holdiays, they will simply change their habits once you educate them.

4 years ago

The only way hotels can drive direct bookings are to give their guests a service that the ota can not.
TapStay was developed by Australian’s so that the hotel owner could use a digital keyless platform and grant the guest total flexibility, security.
True technology, real time, right now. Speed and convenience.

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