Travel giant Expedia has bowed to industry pressure and waived contract clauses which prevented independent motel and hotel owners from undercutting their listings through their own channels.
However, the platform has indicated it will punish hotel operators who take advantage of the changes by ranking them lower on its searches.
The US-based multi-national confirmed it will be axing so-called pay parity clauses or narrow rate most favoured nation clauses (MFNs) on Friday, just weeks after Labor announced it would outlaw them if elected.
Pay parity clauses prevent independent accommodation businesses who ink deals with online travel agents (OTAs) like Expedia from advertising cheaper prices on their own websites.
Providers have long complained the clauses stymie competition and make it harder to run their businesses because of commission fees they incur through the platforms.
But in confirming the decision on Friday, an Expedia spokesperson said those who begin offering cheaper deals may pay a price.
“Australian hotels have the right and ability to offer higher prices to consumers who find them via Expedia sites,” the spokesperson said.
“This means a hotel offering relatively poor deals to consumers who are used to shopping and booking on Expedia sites will not be as relevant to consumers as its competitor hotels offering their best deals.”
“That hotel may find itself ranked below its competitors, just as it would if it had worse reviews or fewer high-quality pictures of its property compared to its competitors.”
Expedia, which also owns Wotif and Stayz, controls 80% of the online travel booking market alongside its competitor Booking.com.
The prevalence of the platforms, including their dominance of online search results, means many business owners feel they have to be listed in order to generate new business.
Operators we’ve spoken to have said they get as much as 60 – 80% of their business through online platforms these days.
Being “darkened” by the search algorithms that guide the platforms can thus have disastrous consequences.
Industry bodies concerned
Accommodation Association of Australia chief executive Richard Munro welcomed Expedia’s decision but said he was concerned Expedia will punish partners who take advantage.
”The AAoA will keep a watching brief that property rankings will not be impacted by complex Expedia algorithms to darken properties due to rates being advertised under Expedia,” he said.
