Monday , October 15 2018

“People feel their hands are tied behind their backs”: The fight for a rate parity ban

A Queentown hotelier claims there is “widespread discontent” over rate parity clauses in NZ – despite an “astonishing” lack of interest from our national media.

Nik Kiddle, owner of Villa Del Lago, says while Aussies are fighting hard for a ban on parity clauses imposed online travel agents, he fears it will take a celebrity push like that of entrepreneur Dick Smith to ignite the debate in the public consciousness here.

He said: “People feel their hands are tied behind their backs here and that we’re losing market share to these essentially American multinationals.

“There’s widespread discontent in the New Zealand accommodation sector that we have not been allowed to put prices on the internet that are below those of the OTAs.

“It’s fantastic to see what Dick Smith has done in Australia. It will take a personality push or celebrity push of that sort to get our respective commerce authorities really looking at this.

“I applaud him wholeheartedly and I’m sure that if it does get taken up in New Zealand as a result; well, there will be a lot of accommodation providers in the country that will be forever in his debt.”

Mr Kiddle has a submission before parliament’s Transport and Infrastructure Select Committee urging members to recommend amendments to the Commerce Act that would empower consumer watchdog the Commerce Commission to investigate issues such as rate parity clauses.

“I think that the Commerce Commission could well follow the lead of the Australian competition authority and if the ACCC makes any signals of some reconsideration of the rate parity clause, then I think our Commerce Commission will follow suit.

“In addition to that, I think that if ministers here become aware of the attention being paid to this issue in Australia, we could get our commerce minister to perhaps look again at the issue from a New Zealand point of view and perhaps to agree to ask the Commerce Commission to have another look at it.”

Kiddle says the industry was aghast when the Commerce Commission, in line with the Australian Competition and Consumer Commission (ACCC), ruled in 2016 that accom businesses could not advertise their own rates online at a lower rate than the OTAs, despite paying 15 percent commission on bookings made through the agents.

“There was a big outcry from people right the length of the country,” he said.

“There has been considerable interest in this from all of the major tourism destinations in New Zealand and they took to writing to ministers, they took to writing to the media about it and we actually did have questions raised in the house about it back in 2016.”

While the previous national government acknowledged parity clauses were an issue and needed to be looked at, it failed to take action. Kiddle says he is optimistic the Ardern government may take up the cudgels.

“I do think the new government may be more amenable to looking at the distortions introduced to the NZ economy by multinationals, especially those that are operating in the sphere of online sales – I think it is an issue that’s ripe for consideration,” he said.

The campaigning resort owner says he is hopeful the Commerce Amendment Bill progresses through the house and that, by putting the submission into the select committee, it will be drawn to the attention of the Commerce Committee as one of the first case studies that they ought to investigate.

Kris Faafoi, minister in charge of the Commerce Amendment Bill, is yet to respond to Accomnews queries about rate parity clauses although his office has confirmed it is looking to provide “some guidance”.

Hospitality NZ is also yet to respond, but its new chief operating officer, Julie White, has previously indicated her preference for a Code of Conduct governing OTAs “in the duopoly environment that they operate”.

“I personally would like to see more hotels take back control of their inventory and transparency / accountability from OTAs on how they pass on rates,” she said.

One industry body did, though, put an alternative point of view to Kiddle’s on OTA commissions and rate parity clauses.

Rayma Jenkins, president of the Bed and Breakfast Association of New Zealand, said: “This certainly has become a big issue in Australia; however as the B&B Association we do think this is not such an issue with small properties.

“Prior to OTAs, you were advised to spend about ten percent of your income on advertising and for us, initially, that was how it was.

“The likes of AA Travel, Jasons, The Bed and Breakfast Book, Charming, The BnB Book and the crème de la crème, the Friars Guide, certainly cost us at least that and with no guarantee of bookings.  Now if you do not get a booking, you do not pay.

“Those of us who are very busy will tell you that to survive and do well in New Zealand, you need to work with the trade (Inbound Tour Operators) and the OTAs like booking.com and let them bring the bookings to you.

“You do not have to have an extensive advertising budget – that is now what you pay in commissions.

“You can advertise ‘book direct for best offer’ and offer a discount on direct bookings but you cannot advertise the discounted price.”

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

One comment

  1. Keep pushing…as a very small operator I feel “blackmailed” into using these platforms & am now advertising on my own website & at the door that this is the way to get the best deal. When reviews mention cost or when a guest checks out I tell them the facts…if you chooes the convenience of the internet to do your booking you will ber paying 15% more in many cases, thats your choice but dont complain. So far Ive had no comebacks from the likes of Booking.com. If they dont like it, fine I will just stop using them & keep putting it out in all types of media that this money is all going overseas not into the NZ pockets

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