NB: This is an article by Jean Francois Mourier, CEO of REVPAR GURU
First, I’d like to start this article by saying “Felicitations!” and “Gratuliere!” to hoteliers in France and Germany. It is an exciting time to be a European hotelier because the laws relating to rate parity are being amended as we speak/write.
In July 2015, the French National Assembly completed the process to ban rate parity clauses in contracts between online travel agencies (OTAs) and hotels. Germany’s courts have decreed that OTAs cannot have a “best price” clause in their contracts with German hotels – and that all OTA contracts must be amended by January 31, 2016.
As many European properties obtain 70% of their business from the OTAs (vs. 35% to 50% in the US) and because most consumers choose a hotel room based primarily on price, the new laws can help French and German hoteliers funnel more business to the direct channels, minimizing their reliance on the OTAs, while increasing occupancy, decreasing the cost of acquisition and increasing overall RevPAR.
While it is still not clear exactly how the European market as a whole will be affected by this ruling over the long-term, we are seeing drastic changes on the horizon that will have HUGE effects on the industry – both in Europe and abroad. Booking.com and Expedia are implementing changes in their contracts in other European markets, allowing hoteliers to offer lower prices on competing OTAs but NOT through their direct channels. The two OTAs are making this change in an effort to preempt further legislation (similar to France and Germany’s rulings) that would banish rate parity clauses across the board.