Monday , October 15 2018
ACCC chair Rod Sims

Australia eyes parity clause ban as consumer watchdog gets a roasting

The Australian consumer watchdog has given a strong indication of an impending ban on the rate parity clauses imposed by online travel agencies on accommodation providers.

Accomnews revealed last month that the Australian Competition and Consumer Commission was considering a ban, but a campaign by business personality Dick Smith urging the public to book accommodation direct and criticising the ACCC for perpetuating unfairness is putting increasing pressure on the organisation to act.

In a much-publicised video, the “angry” Smith said of contractual clauses between accom operators and booking sites:  “The ACCC has allowed the contract to state that an own family’s website will not advertise cheaper than what’s on the big multinational site. Imagine that!”

The watchdog’s chairman Rod Sims this week conceded bookings made through online travel agencies (OTAs) “are likely hurting Australian businesses”.

He confirmed the ACCC is looking into legislation banning OTAs from contractually demanding that operators do not offer lower prices on their own websites.

In 2016, the ACCC ruled accommodation operators could offer lower prices over the phone or in person, but that OTAs were entitled to expect rate parity online.

For many smaller operators, which list with OTAs to give their property visibility online, rate parity clauses written into contracts mean they are paying commissions of 15 to 25 percent on bookings made through the platforms but cannot make their direct book prices more attractive.

“We are looking at whether the rest of the agreement, in terms of online parity, is anti-competitive,” Sims told The Guardian this week.

And he said of OTAs: “At first they were good. They gave hotels a wider audience than they would otherwise get.

“But they have become so universal now that a lot of hotels and motels believe that they won’t get any business unless they are signing contracts with these entities.”

In July, the Swedish Commercial Court ruled Booking.com, and by implication all OTAs, had no lawful right to stop businesses offering better conditions on their own websites than those it provided to the online travel agency. The Scandinavian country followed Belgium, France, Italy, Austria and Germany in moving to legislate against parity clauses.

Online booking sites currently take around 80 percent of all Australian hotel bookings, with US-owned companies Expedia (including Hotels.com, Wotif.com and Trivago) and Priceline (Booking.com, HotelsCombined.com and Kayak) controlling some 85 percent of all online hotel bookings.

Dick Smith is urging consumers to boycott the booking sites because they “extort” small businesses, calling them leeches and comparing them to the notorious standover men of 1950s Sydney.

Carol Giuseppi, CEO of Tourism Accommodation Australia, says that while she encourages consumers to book direct and take advantage of loyalty programs, OTAs remain a valuable distribution channel.

“The reality is that the commission is there because the online travel agencies are marketing those rooms for the hotels,” she said.

“However, TAA does have concerns over misleading and deceptive behaviour and unfair contracts where they apply. We have been strong advocates for accommodation providers having control of their rates and inventory.”

About Kate Jackson

Kate Jackson
Kate Jackson is the editor of Accomnews and Accom Management Guide. You can reach her at any time with questions or submissions: editorial@accomnews.co.nz

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