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Rate parity to be banned under Labor

A policy loathed by almost every Australian accommodation operator will end under a Labor government, following what industry figures describe as a “historic announcement” this morning.

Opposition competition minister Andrew Leigh has committed to legislating against the rate parity clauses contractually imposed on accom businesses when they market through the two online travel agencies (OTAs) which dominate online bookings globally.

Under current laws, the clauses prohibit operators from advertising prices on their own websites which are lower than those on Expedia or Booking.com-related sites.

Operators are charged between 15 to 25 percent for each booking made through an OTA, with the two US giants accounting for 84 percent of online bookings for Australian properties.

Those defying the rule have seen have their property listings “darkened”, which means they are made almost invisible online by being pushed to the final pages shown to prospective customers.

Tennant Co ANAU Mid Article 300×250
Leigh told journalists at Brisbane’s Manly Marina: “Increasing competition helps drive costs down for consumers by correcting the power imbalance between small business and the big end of town. It’s good for Australian consumers and it’s good for Australia’s economy.

“Our local hotels want to be as hospitable as possible, but they’re paying a huge chunk of their revenue to the booking platforms, and losing their direct contact with guests.”

An industry insider told AccomNews it was now likely the Coalition would follow with a similar policy announcement.

The parity ban follows a prolonged campaign by leading industry bodies for action from the Australian Competition and Consumer Commission over the imposition of parity clauses.

The ACCC is in the final stages of its long-running investigation into OTA practices and may soon announce its own intentions to act on rate parity.

Richard Munro, CEO of the Accommodation Association of Australia, told AccomNews: “The AAoA  welcomes this historic announcement from the Labor Party.

“Effectively this means that our industry will, should the Labor Party win office, be able to finally offer the best rate directly to our customers without fear of being darkened or threatened by these big multinational OTAs.

“This announcement is very welcome for our members and the industry across Australia, the winners will be the operators of small business and the public who can finally get a better deal by going direct online once this legislation is passed.”

Under current ACCC rules, properties are only able to offer lower rates than those advertised by the OTAs for direct bookings over the phone, in person or through loyalty programs.

Munro said: “The fact that any operator of accommodation is unable to sell a lower rate online is an outrage and does not pass any fair test and the public are getting a dud deal when they do not book direct or via a bona fide ATAS-accredited Australian agent.”

Industry surveys show price parity clauses are the number one complaint from hotel operators. They have been banned in several European countries, including Germany, Italy, France, Sweden, Belgium and Austria.

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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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7 Comments

  1. This is excellent news. Now lets see both parties come to grips with Airbnb and start applying fair competition principles to these platforms, and the people who buy up residential apartments to pitch them to the market just below the price of the licensed service apartments or bed and breakfast just around the corner.

  2. I agree Jane, this is great news. However I also think this is a non-political issue that should be supported by all political parties. On what grounds could the Coalition for example, refuse to support the abolition of O.T.A. applied Rate Parity. Recently OTA’s have been found guilty by the UK Consumer Watchdog of “Sharp Practices” and have been given until September ’19 to clean their act up in that country. So politicians of all parties, it’s time to support the Labour initiative to ban the “anti competitive” OTA sponsored Rate Parity Policy.

  3. Reader feedback – INFO MAYER

    How ridiculous:
    On-line parity between Booking.com, Expedia, Agoda and a few others?
    They all belong to the same US company: Priceline.
    Priceline now is about to enter the money grab in advertising under the Priceline brand!
    When are we going to be taken over and become a new US state?

    What’s all this talk about helping small business?
    We work longer hours and have less income than our employees, and have all the risk and responsibility.

    Ridiculous!

  4. Reader feedback – KEVIN MURPHY

    Dear Editor,

    A personal observation from your article on Rate Parity promises today:
    Politicians have been known to promise a lot of things before elections that they don’t or can’t follow through on.
    Could we not also have seen the article include a calling for all parties to join such a sensible proposal?

    Maybe a more cohesive industry could & should still have taken the responsibility more seriously to have better educated ALL ttheir political
    representatives of the risks that such OLTAs might & do bring to struggling businesses both large and small, and admitted that it was the
    larger international business operators who let them in in the first place.

    Or haven’t they came under the same preferred taxable scrutiny when it comes to their own offshore fees transference?

    We are relying on politicians to clean up a mess that the sector should never have allowed happening.
    Let’s hope, like the movement for universal suffrage over a century ago, a political groundswell from Australia will retake the world,
    but I’m not holding my breath!

    Has anyone got the same Party’s promise also on a more realistic and practical approach to Weekend and public Holiday loading then they continue
    to threaten those same businesses with when they get in or didn’t you want your writer to include that in a more balanced article?

    Did the sector’s lobby group also get a promise not to go ramping up those again if they also get in, or have we sold our soul again too early in return
    for such a promise as reversing rate parity alone??

    Respectfully yours,

    1. Hi Kevin
      Thanks for getting involved.
      The AAoA have and are currently working with government as well as cross benches such as one nation, Bob Katter who all by the way are supporting this, but Labor were the first to market. Lobbying all of these MPs in Canberra is the expertise that the AAoA do on behalf of our members and we have this announcement as a result.
      Hopefully you are already a member of AAoA, Our members are supporting our efforts to get a better deal on this and many more issues such as the industrial relations landscape, which I agree is a concern, particularly when people like Sally McManus, MWU, calls for a minimum wage increase of 6% per year!
      I have been in the industry for over thirty years and the fact that a major party is specifically making announcements on a key issue we worked with them exclusively on shows that politicians are listening to this industry.
      Cheers
      Richard Munro CEO AAoA

  5. Reader feedback – MICHAEL BRITTEN

    It would be good if labour could extend regulatory control to include Domestic travel agents such as Expedia who allow a period of 12 months in which to claim your reimbursement from them and if you don’t you forfeit any right to claim .
    With take overs and consolidations within the Industry and no notification as to change of ownership it has been sometimes difficult to know whom to bill and achieve payment within the 12 month time limit .
    In Australia a debt is valid for 6 years but this is ignored by Expedia.

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