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No smooth sailing with OTAs

Two hundred and fifty years after Captain Cook battled Queensland headwinds on his ship Endeavour, Rebecca Strang’s Cook’s Endeavour Motor-Inn is fighting the turbulent hot air of Online Travel Agencies.

Ms Strang is just one of countless accommodation providers around Australia calling for a national campaign against the power of overseas-based internet sites and their iron grip on Australian hotels, motels and resorts.

Her property is situated in the heart of where the coastal towns of Coolangatta and Tweed heads merge – an area of great surf and swimming beaches, coastal walks, tropical fruit, cafes and restaurants.

But the OTAs continue to create stormy waters.

Ms Strang has called for ASIC to reassess the price parity issue because she says it prevents her advertising a cheaper room rate on her website than she does with the OTAs.

“You can’t not be on Booking.com or Expedia otherwise people simply can’t find your property,” she says, “but I’m not allowed to advertise cheaper rates because ASIC has given the OTAs free rein for price parity.

‘I had a situation where Expedia told me they were going to downgrade my listing because they had found my room rates advertised cheaper somewhere else when in fact they weren’t. They never have been.

‘A month late they then emailed me and said if I was prepared to pay more commission they would rank me higher up the screen. 

“Then they try to tell you what you can and can’t do as far as running your motel.”

Two years ago entrepreneur Dick Smith, appalled at OTA tactics, made an impassioned plea for Australians to telephone accommodation providers directly and make their bookings without paying overseas middlemen a huge commission.

His message was that the customer would save money and the industry would benefit by keeping all the money in Australia.

Mr Smith’s social media video went viral and had an immediate effect, with the Budget Motel Group, among others, reporting a surge in direct bookings.

But two years on, the OTAs are still using pressure tactics to maintain their grip on Australian accommodation properties.

“I would support any booking direct campaign,” Ms Strang said, “but the OTAs have such a huge advertising budget they can wipe individual properties off the face of the earth. You can’t compete with them individually.

“Perhaps a co-op situation with all Australian properties chipping in for our own website might be worth a try but the internet generation is so ingrained with searching on the web that I think many people can’t be bothered to search for the property individually and ring it for a cheaper rate.

“It is tough to break that habit. We even had the NSW premier go on television when the borders were reopened telling people to `book online’. She should have been telling people to `book direct’ because all that commission money is going overseas.

“Since the pandemic, we have found that people are so brainwashed into booking everything over the internet, that our OTA bookings, as a percentage, have increased dramatically. 

“So many people think they have booked directly with our motel and then they discover they have actually gone through one of the OTA websites.

“We went to our local tourism board asking if they would mount a `book direct’ campaign and they said they wouldn’t because they needed to keep the OTAs happy.

“That’s what we’re up against.”

UPDATE: AccomNews approached Expedia for comment and a spokesperson responded:

Hotel partners in Australia are free to charge higher rates on our marketplace than on other channels, including their own site. However, providing their best prices, content and amenities to travellers who find them on our sites is the most effective way to convince consumers to choose their accommodation over other similar accommodations across our platform. This gives hotels an opportunity to attract and delight more and more new consumers, leading them to come back to their property either through our channel or through their own.

We operate a traveller-centric marketplace and work hard every day to present a highly intuitive consumer-facing online travel platform that enables travellers to find their best travel options quickly and efficiently, helping to increase travel overall and stimulate the economy.

As proven by decades of data analysis and surveys, price is a critical element in consumers’ decision-making process, hence why it is one of many factors we take into account to differentiate otherwise similar accommodation offers in our marketplace.

Grantlee Kieza

Grantlee Kieza OAM has won three Queensland Media Awards, two Australian Sports Commission Awards and has been a finalist for the Walkley and News Awards and for the Harry Gordon Award for Australian sports journalist of the year. In 2019 he received the Medal of the Order of Australia for his writing. You can find more of his writing in our upcoming Accom News print magazine!

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7 Comments

  1. The OTA beast has been created by the demand of guests wanting choice in one location and hoteliers giving themselves, and their marketing, across to OTAs. So you can’t have your cake and eat it too. I have been a hoteliers and I have been an OTA. As a hotel, you cannot expect an OTA to do all the marketing and promotion to make you visible, then allow you to take customers on to your own website and capitalise. We all know guests look at multiple websites including the hotel’s own before they book.
    Yes, in a perfect world you would do all your own marketing, build consistent guests and not use OTAs. But that is a little naive these days. An OTA costs you 15-245%. How much does employing a marketing team cost?
    So, it’s something you have to live with. BUT you can make it work. The rates you offer and the allocation of rooms you provide will allow you to control the number of rooms you have left to market directly. So increase your direct marketing and also capture the details of the OTA generated guests so you can market to them directly. OTAs hope to get the first couple of bookings from a customer but are realistic that hotels will try and steal them away. They price this in to the commission. Also consider the money you pay to OTAs as the price of acquiring a new direct guest. (lead generation). BUT make sure you market to the guest and make the most of it. Too many hotel and motel owners get lazy or don’t make the time because they are busy with running the property. Hence they become more reliant on the OTA and so the wheel turns. Good luck.

  2. Well said Harrison Brown. This is a two sided sword. OTAs do make it easy and simple for the guests, they do bring in guests and it is up to the Accommodation providers to try and win over the customer to book direct. This is about as much as you can do as an Individual operator.

    What I dont understand is why our representational bodies such TicSA and the HMAA, and a heap of others, dont undertake a marketing campaign to inform consumers and encourage them to book direct. Dick Smith would happily take on the role of star power credible advocate.
    These bodies purport to represent us? If funds were needed, then start up a fighting fund. I am disappointed that our Industry bodies don’t tackle this on our behalf and we should pressure them to do so. I wont belong to any until they tackle this issue.

    Not to get rid of OTAs as they do a valuable role for the consumer and us but to educate the consumer and allow them to make an informed choice of who they book through/with.

  3. Harrison Brown, I do agree with your statements. Because of the ME generation and everything sacrosanct is on the internet, TRUTHFUL CORRECT.
    I for one, object to the OTA’s, they are bullies, and they got into the system over years of Stealth in Marketing.
    They put nothing into my business, and are extremely demanding.
    They provide Marketing YES, that’s it. They hide our marketing campaigns, amongst multitudes of advertising, we can be found around page 6.
    Every guest that comes into our place, is flabbergasted to know that they would have received a far better room, a Far better deal, and are advised to use these sites, then book direct.

  4. I’ve been channeling my inner Dick Smith for the past few years through my social media channels. More recently I’ve had some exposure through the local media, education is key, and “real people” telling the story behind the small businesses that are feeling the pinch.
    Right now as we look to rebuild our business and recover from the devastation of cancellations in 2020 thanks to Covid, NOW is the best time to be campaigning and marketing.
    I’ve been pushing through AAoA and VTIC to try and get a “BOOK DIRECT” condition including in the State Travel Voucher scheme … it’s simple, the Government are handing money over, but don’t seem phased that a large % percentage of it is going offshore. Let’s educate NOW. Those not in the industry are keen to support us, and often oblivious to the % amount heading offshore tax free.
    It’s time to take back our industry.
    Why can’t #holidayherethisyear campaigners Hamish Blake and Zoe Foster Blake take on an ambassadorship!!!

  5. The Managing Director of Accor admitted in an interview some time ago that they had ”dropped the ball” in 2009 after the world wide financial crash which allowed the OTAs to gain a larger foothold in the would wide tourism sector. It would seem to me that in-spite of the admission the larger multinational hotel chains who could do something about redressing the balance have demonstrated a complete lack of interest . Dick Smith tried hard to alert the industry, the public and the relevant government bodies but for the most part his cries have fallen on deaf ears. As an example of the complete disdain shown to the industries concerns Visit Victoria actively promotes booking through a link to booking.com on their site and the federal Government whist encouraging consumers to “‘Buy Australian” quite happily allows OTAs which are foreign companies, who for the most part pay little or no tax( but we do) to have our tourist dollars repatriated overseas.
    The industry is struggling and whilst I accept that the OTAs are here to stay it needs to be a more level playing field. Small properties do not have the large network from which to draw bookings despite the amount of marketing that they may and are therefore forced into the userus commissions the OTAs demand to be able to survive. Just on an individual booking the OTAs earn more than the property, in some cases the difference is up to 45% of the gross as opposed to 13% of the net to the operator. it is a bit akin to the virus we are now struggling with, the only difference being that we will find a cure or vaccine to Covid but the OTA virus will ultimately kill its host, the industry in particular the small operators.
    It is well past time that the representative tourism bodies and the governments both state and federal stood up and did something to help.

  6. Holiday Here and Book Direct is the message that should be sent.
    Keep our Aussie Dollar in Australia. Australians should be supporting Australia’s economy.
    Think about the amount of money that goes overseas to these overseas owned OTA’s, think what that amount of money could be doing for Australians.

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