In Europe, rate parity is a piñata that everyone’s taking a whack at. But not everyone in the industry agrees about what they’ll find inside.
Probes in Britain, France, Germany, Italy, Sweden, Ireland, and Austria continue to investigate rate parity, or contract clauses that stop operators from offering discounts on their brand.com websites.
Here are a few updates:
Britain’s Competition and Markets Authority (formerly the Office of Fair Trading) is due to announce its decision on hotel rate parity practices. Its earlier ruling had been partly overruled by a tribunal.
On 2 April, the German Federal Cartel Office (the “FCO” or “Bundeskartellamt”) sent a cease-and-desist letter to Booking.com over its rate parity clauses.
UPDATE: 7amET Booking.com makes changes to rate parity clauses in Europe.
The move followed its parallel proceedings against its smaller competitor HRS that were upheld by a higher court in January. HRS deleted rate parity clauses from its contracts last year. Proceedings against Expedia continue.
In France, Accor and other hotel owners are participating in discussions among Booking.com (owned by Priceline Group), hotel unions, and the French Competition authority to establish more balance between the OTAs and hoteliers.
In December, Booking.com partly removed some of its rate parity clauses, enabling hotels to offer different rates for their rooms to other OTAs.
In January, France’s competition authority tested this solution to see if consumers were still, in its view, being harmed. Its verdict is expected soon.
The European Commission said that a settlement with key countries like France will be made valid for all of the Continent.
Finally, authorities in Sweden, France and Italy have this week also united to push Booking.com into making some changes.
Après la parité, le déluge
With or without rate parity, hotels are under tremendous pressure in Europe because OTAs and metasearch websites drive 70% of bookings, on average — significantly higher than the 35% to 50% range said to be typical in the United States.
Guilain Denisselle, an expert who has written about the rate parity debate for Tendance Hotellerie, told Tnooz that even if regulators curtail or stop rate parity, hotels still face a tough market:
“Many hotels will die. The estimation in France is that 3,000 to 4000 hotels will die out of the 18,000 actual hotels: too small, too old, not enough revenue, etc…
The hotels that can win are the ones that already understand the concept of rate integrity, that do not discount too much, that invest a lot in their product every year, and that talk to their customers and get their engagement.”