IndustryManagementOpinion

Where are the OTAs when it comes to recovery funds?

The head of a leading national motel chain has questioned why Australia’s ‘big three’ OTAs are not on any donors list following a horror summer tourism season.

Charles Ikstrums, chair of the Budget Motel Chain told AccomNews: “After years of drought, catastrophic bushfires in the last few months, the coronavirus outbreak, and now the possibility of widespread floods, the rural and regional tourism and accommodation industry has been knocked from pillar to post.

“The federal government has recognised this via the $76 million recovery package, and the Australian public, many Australian and international celebrities and corporations have responded magnificently, thus far raising in excess of $0.5 billion and growing.

“A recently published list of major donors revealed who many of these generous and compassionate people and companies are.

“Interestingly, the major players in the Australian accommodation industry, who have an overwhelming amount of control, were noticeably missing from this list.

Correct me if I am wrong, but the BIG three, the OTAs Booking.com, Expedia and Airbnb, have NOT contributed or directly assisted in any way.”

When AccomNews approached the OTAs for comment, Booking.com declined the offer and Airbnb pointed to its work helping bushfire evacuees find properties willing to house them in their own communities. 

Only Expedia was able to provide details of initiative specifically targeted at aiding its partner properties, its statement saying: “We are working to help get Australian tourism back on its feet by utilising the power of our team, global platform, portfolio of brands and local relationships.

“Specifically, we are encouraging and promoting domestic travel through marketing campaigns, working directly with lodging and other supply partners to provide tailored support based on their needs, and we have a team working to drive travel destination awareness in an aim to get new, targeted visitors to Australia’s regional places.

“As part of this effort, we are offering a 2:1 match of ad spend for Australian tourism boards via our Media Solutions business, allowing them to extend their reach to travellers across Australia and the world.

“In the immediate aftermath of the fires, Expedia Group matched 2:1 every donation our team of 24,000+ employees made to disaster relief charities involved in supporting the response to the bushfires.”

Ikstrums argues OTA efforts centre around asking cash-strapped operators to spend on ad campaigns they can’t afford. 

“Just yesterday, I received an email from one OTA suggesting that I reduce my prices by 20 percent to offset the potential loss of bookings due to the coronavirus. Thanks, but no thanks,” he said.

“And this morning, from another, and I quote: ‘If you have to cancel a reservation due to a bushfire or any natural disaster, it will not affect your ranking and we will refund any traveller the service fee directly back to the customer.’ Thank you again.

“Is this the best we can expect from organisations that annually take in excess of $800 million OVERSEAS virtually tax free?”

Instead, he suggests, the OTAs could make a cash contribution equivalent to the GST every accommodation provider pays on each booking, adding $80 – $100 million to the recovery fund, or suspend commission fees  charged to affected properties for a period “until they get back on their feet”.

“Or, in the case of one OTA, who played what has now been determined to be a misleading advertisement that was aired more than 400,000 times, perhaps they could advertise that rural and regional tourism was still alive and needed support?” he commented.

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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8 Comments

  1. The OTA’s need to be looked at with this whole situation., They have used bullying tactics dictating to accommodation providers that they must refund for the virus situation but nothing for other important issues such as bush fires, showing a complete concern only for their future income from China. We actually blocked our inventory with Expedia when they did this and then told us we should run a promotion giving 20% off to encourage bookings, nope not happening. Yet to see any of them offer free or even reduction in commissions while the sector recovers. Accommodation providers need to band together and tell them they work for us not the other way.

  2. How much money do they think we make out of OTA bookings? If you can cover your expenses you are lucky! A small business would certainly not cover their expenses if they ran the further 20% off promotion. I just ignore all those emails – delete them, in fact! Did they hear me say that? Guess my motel will go to the bottom of the bunch!

    1. Kathy,you are 100% correct.Take for example a $100 room booked on an OTA.. Lets break that down.
      GST 10% = $90
      OTA Commission Not on the $90 but on $100 $15-30 =$75 at best
      Overheads eg
      Staff wages
      Superannuation
      WorkCover
      Insurance
      Rates
      Power/Gas
      Bank Charges
      Laundry
      and I could go on
      That doesn’t leave much to pay the mortgage or rent
      Oh , by the way we have to eat too!

      1. Exactly. How are small business to keep their doors open with this happening all the time. We are in our low season at the moment and we are struggling, it the quietest low season we have had.. We have had to lower our online rate just to stay in competition with the other accommodation providers in our town which means we make next to nothing. We pay the highest rates out of all the accommodation providers and yet we have the cheapest rooms. You cannot get ahead by using OTA’s. Sad part about it customers that do come in the door asking what the rate is will turn around and say can you do better than that! Obviously they have no idea what it costs to stay in business.

  3. Its interesting that OTAs AirBNB and tourists organisations say reduce your rates but the OTAs etc don’t reduce their commission they just add on discounts – genius bookers etc and extra 10% discount here and there and us little folks end up with very little. We are in FNQ so rely on the airlines to deliver our guests to us whereas Sunshine Coast and Gold Coast have a drive market. We are in favour of keeping the China doors locked until the virus settles down – just imagine if we don’t and more turn up with the virus – yes its tragic what’s happening to us at the moment but better safe than sorry. All we hope for is people travel within Australia and book direct with the hotel they want to stay at.

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