IndustryNews In Brief

Fighting town wants end to OTA low blows

BENDIGO is the only city in the world named after a prizefighter, and motel owners in the beautiful Victorian rural centre are sick of low blows from Online Travel Agents.

They are backing repeated calls voiced in AccomNews for a national campaign urging guests to book directly with accommodation providers.

Bendigo, named after the British bareknuckle fighting champion “Bendigo” Thompson, was once one of the richest gold towns in the world and it is now producing a hardy new breed of “diggers” determined to fight back against the OTA commissions.

Jen Baxter, who has run the Heritage Motel in Bendigo for three years and is treasurer of the Bendigo Motel Association, told AccomNews she fully supported a national campaign to “educate Australians about booking direct” with properties. “On behalf of the Bendigo Motel Association (27 members) we would welcome a campaign,” Ms Baxter said.

“Most of our guests are shocked and then disappointed they have sent Australian dollars overseas because they have booked their stay through an Online Travel Agency rather than directly with us. “I now have signs on the mirrors in all of our 24 rooms informing guests that the commission they paid to an OTA has gone out of Australia and is now overseas. It’s amazing the response we get because people still do not know how much the OTAs are charging guests when they book a room.

“Australian businesses also need to stop using these platforms for their corporate travel. We need to keep that commission money in Australia to help our own industry, especially after the way COVID has hit all of us.

“Would anyone in a sales business discount 15 per cent to a customer every time they made a sale? That is what motel owners are being forced to do when guests use OTAs. Every time we have a guest who hasn’t booked directly with us we are sending a 15 per cent commission to an overseas company. “We need to shout this message from the roof tops.”

Ms Baxter said the industry was “up in arms” over OTA tactics and commissions, and while she had never really experienced “bullying” from the OTAs, she said she was constantly being “pressured” to accept their directions.

“Only this week I had a call from Booking.com telling me that I should be upping the ante and paying more of a commission,” she said.

Trevor Rawnsley, the Chief Executive Officer at the Australian Resident Accommodation Managers Association, told AccomNews that a “public education campaign on direct booking” deserved widespread support but that peak tourism bodies had to be involved to make any campaign work.

“Organisations such as ARAMA simply don’t have the millions to throw at this to change public opinion,” he said.

“It’s not just having the will, it’s also having the marketing muscle to outshout the OTAs and their huge advertising budgets.”Mr Rawnsley urged tourism bodies to put in a “call to action” urging guests to book directly with local accommodation providers and local attractions rather than using OTAs.

“We get a lot of fancy ads creating a desire to go to a particular location,” he said, “but tourism bodies should also put the message out there to book direct to support the accommodation providers.” He said by booking directly guests could get a better deal for themselves and a better deal for the accommodation provider, “who in 80 per cent of cases is a small business operator”.

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10 Comments

  1. Customers and moteliers both need educating. The amount of motels/hotels giving their best rate to OTA’s and charging direct bookers more is staggering. I use booking.com to find a motel to stay and then contact the property direct. The amount of times the motel’s prices are dearer and they won’t won’t even offer the same price as what they offer booking.com is staggering. Once i rang a motel and his price was $25 HIGHER than booking.com. I said, happy to pay you directly the same price your selling for on booking.com and then you don’t have to lose commission.. His reply “Book on booking.com then” OTA’s have brainwashed guests and their marketing budget is in the BILLIONS each year – no amount of marketing that a property or a group of properties and even tourism Australia can’t even compare to OTA budgets. Guests who book on booking.com genuinely believe they are booking direct – Thanks to OTA’s marketing.
    I do note the motel in the article has a room price of $128 directly yet on booking.com it’s $129.. $1 saving. We charge $10+ more for OTA bookings and are prepared to lose our ranking on the sites for the privellage. Expedia have remove parity clauses.. Push booking.com to remove parity clauses and then everyone (and it must be all motels) charge all OTA’s $10 to $20 more and that’s the only way to educate people, with their wallets!

    1. Absolutely correct I have experienced the same many times too. I was in a chain and even in the chain I had experienced owners (that I personally knew) try to charge me more than the OTA’s
      Go figure?
      Your right when you have your rates $10 to $20 more on these sites and have the best rate on your own. That’s pretty basic business sense IMO!

      1. The hotel is not selling to the OTA at a lesser rate. The OTA is discounting their commission to undercut the hotel. They make their money on volume of sales. The OTAs try to i force price parity with the hotel through their contract ie the hotel cannot under cut the OTA. If the hotel does so they risk being delisted or greyed out on the OTA search engine.

        1. @Barry, Yes, this is the case regarding price parity. But match the price and don’t give them a a cheaper price. There are MANY motels out their discounting OTA’s to get the bookings rather than direct. OTA was undercutting our rates by discounting out of their commission, they can only discount so much. They can only do that via virtual card or OTA collect. Quickly changed that and made it hotel collect, stopped them discounting the rates. When you’re talking $25 cheaper on a $100 room, that’s not the OTA discounting. That’s the hotel/motel offering lower rates to OTA’s than their direct bookers. Even matching the price will still be more profitable to the business then taking the OTA booking.

    2. Often your big chain staff are not interested in discounting from OTA because they are often under enough pressure in there day to day role. I found whilst working with Hilton, IHG and Accor, there was always some pricing issues and regularly cheaper prices via OTA’s.

      Don’t get me wrong. I’m invested in the Motel side, and it is my business and day to day life, but I think you need to look at user acquisition costs. OTA’s are not more expensive than Google PPC or any other acquisition method.

      The only difference being that the OTA’s try and enforce rules, but at the end of the day they cannot stop you as KK said from having other options for guests to book direct.

      Unfortunately, it is a world where Google, and the OTA’s are so big and have so much power in the market that it puts us against it.

  2. I commented on the original article regarding this issue with OTA’s. And again I reiterate, where and when, I will fully support such a move.
    I recently received a VERY FIRM request from an OTA (the big E), which I advised them NO. I thence went into their site and was greeted with statistic’s of this year and last year. I hadn’t realise how much these SNOOZERS are getting.
    Year 2019 $AU 87,500.00, year 2020 $AU 38,000.00 – The Big E
    I am going to see if I can work our what the costs have been with The Big B, as they are so popular, i would guesstimate well over the $AU 200K mark. This is big bucks for small family owned and run Aussie business.
    These OTA’s are getting very hard sell currently cause of the Covid situation, and will try on everything to get more profits from us.
    **YES we now check every morning the rates, and match **

  3. I contacted the ACCC back in June to ask about price parity contracts and they sent me the attached article. Seems many are still under the impression we are bound to Booking.com’s price parity but we are not. Funny they didn’t let us know. We actually dumped Agoda because they were listing our rooms cheaper than we could and paying the difference. When I told Agoda we are done, they said we are contracted via Booking.com to keep our listing on there, so I removed all inventory.

    https://www.accc.gov.au/media-release/expedia-and-bookingcom-agree-to-reinvigorate-price-competition-by-amending-contracts-with-australian-hotels

    1. Hello we advertise our prices on the OTA’s at our rack rate +15%. We are only a small motel but were sick to death of the undercutting and commissions leaving our shores. We still get alot of online bookings but but if they go to the website we have an instant pop up that says ring direct for guaranteed best price and availability. We will instantly drop the price by 15% for a direct booking and tell guests to always contact the motel direct and check their direct price before booking online.

  4. The thing that we do not talk about enough is the fact we the property controls the inventory. If we as an industry stood together and withheld our inventory then these OTA’s would cease to exist.
    Now I personally think that OTA’s have a place and are an important part of our industry, it is the tactics and abuse of their market position that is the problem.
    While easier said than done I believe that we need our different industry groups to come together and create a code of practice for OTA’s that specifically bans the sort of behaviors that creates the friction with accommodation providers. Things like brand jacking, undercutting supplied rates, bullying and other anti-competitive behaviors.
    Then if the OTA’s did not sign up to and abide by the code of conduct then all members of these industry organisations(and all accommodation providers should be a member of at least one industry association) should remove their inventory. Provided we all stuck together they would soon change if they otherwise had no product to sell.

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