The competition regulator will consult with Australian hotel operators to help determine if “pricing parity” clauses imposed by online travel agents Expedia, Wotif and Booking.com are unfair.
The beginning of a consultation process follows Expedia’s $703 million takeover of Wotif last year, which resulted in a jump in commission rates at the major online travel agents to 15 per cent from 12 per cent previously.
Global giants Expedia and Priceline, the owner of Booking.com, now control about 80 per cent of the market for online hotel bookings in Australia.
The price parity clauses restrict hotels from offering a room for a lower price on their own website than they do through the online travel agents, even though the online travel agents collect a 15 per cent commission on each booking. They also ensure the last free room at the hotel is part of the available inventory of the online travel agents.
Accommodation Association of Australia chairman Richard Munro said such clauses had been of concern for some time, but they were exacerbated by the Wotif takeover, which had turned online bookings into a duopoly on the level of supermarket chains Coles and Woolworths.
“These were amplified when operators were recently notified the other dominant player in the market, Priceline (Booking.com), would increase the commission rate that it charges accommodation operators from 12 per cent to 15 per cent,” he said.
In many countries, Expedia and Priceline charge up to 20 per cent commission, but in the Australian market the rates had been lower because Brisbane-based Wotif was for a long time the dominant player.
Price parity prevents direct booking discounts
Mr Munro said polling of his members had shown that 90 per cent would be willing to offer consumers lower rates for direct bookings, but they were unable to do so because of price parity clauses. A hotel would benefit financially by being able to offer a 10 per cent discount for a direct booking, as it would not need to pay the 15 per cent commission to the online travel agents in that case.
Read full article at: Sydney Morning Herald
