ACCC HOTEL RULING SEES MIXED REACTION

In Business by Clyde Mooney

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Australia’s consumer watchdog has granted hotel room providers some respite from the online duopoly ruling the sector, but feelings are mixed on whether changes went far enough.

Last Friday the Australian Competition and Consumer Commission (ACCC) announced the results of a deal struck with the online accommodation booking giants Booking.com and Expedia.com.

ACCC chairman Rod Sims pronounced it a win for consumers, advancing opportunities for business out of the Commission’s investigation into the anti-competitive nature of ‘parity clauses’. The investigation began as a result of concerns raised by accommodation providers.

“Australian accommodation providers will now be able to tailor their offers to better meet the needs of their customers and their own businesses requirements,” said Sims in a statement.

Fundamentally, the agreement allows hotels now to offer cheaper and discounted rates over the phone or in person, or via a loyalty system. But they must continue to abide by the Online Travel Agents’ (OTA) contractual “lowest price guarantee” that forbids providers undercutting the OTA prices on their own website.

For years hotels have been obligated to provide all available rooms to the OTAs, and cannot vary from the price listed online.

Booking.com, which also owns Wotif.com, and Expedia.com together control over 80 per cent of the online booking market in Australia, and previously, hotels offering lower prices elsewhere were threatened with de-listing from the dominant online sites.

The companies agreed in negotiation with the ACCC to allow hotels to offer lower rates offline, which can include personal enquiries, billboards and signage, and external advertising such as local papers.

Hotels can even promote discount opportunities such as loyalty programs on their website, just not a specific lower price.

The OTAs regularly charge as much as 15 per cent commission for online bookings, and Sims suggests bookings made extraneous to these could mean even greater discounting for consumers.

“I would be surprised if it is not at least 20 per cent,” he told the AFR.

But in an era where online booking is far by the dominant preferred booking method by consumers, the Accommodation Association of Australia (AAA) says the new arrangement does not go far enough, and questions the workings of the ACCC’s deal.

“By far the biggest concern is that operators of accommodation businesses are prevented from advertising on their own websites a lower room-rate than what these online travel agencies display,” said AAA CEO Richard Munro.

“The ACCC has seemingly overlooked the fact the internet is easily the number-one way consumers book accommodation.

“We would be keen to learn how many such operators the ACCC met with before reaching the agreement with the online travel agencies.”

Tourism Accommodation Australia (TAA) agrees, stating the new rules have “clearly lessened competition” given that 60 to 95 per cent of hotel bookings are made online, and noting that smaller providers are particularly “vulnerable” to the power of the global duopoly.

“We advised the ACCC it should have insisted that OTAs allow hotels to set their own rates online,” said TAA CEO Carol Giuseppi.

The Australian Hotels Association WA called the agreement a ‘step back in time’ and has already announced it will be part of a protest alongside the TAA, meeting with Government representatives in Canberra this month.

“It seems like it’s back to the 70s for the ACCC,” said AHA WA CEO Brad Woods.

“This deal is not fair for Australian consumers or hotels, especially smaller businesses in regional Australia that are struggling to be competitive,” said Mr Woods.

While overall benefits of the new rules remain in doubt, they may yet see growth in subsidiary channels such as loyalty programs or aggregated stock arrangements with external vendors that could provide smart operators with new opportunities.

“Over the past year a number of hotel groups have committed to providing members of their loyalty programs with exclusive rates lower than that offered by OTAs, which highlights the benefits of booking direct with hotels,” added Giuseppi.

“For consumers, joining a hotel’s loyalty club is the best guarantee of accessing competitive rates.”