The Accommodation Association of Australia (AAoA) and the Australian Hotels Association (AHA) and Tourism Accommodation Australia (TAA) have slammed the ACCC decision to allow the acquisition of Wotif Holdings Limited (Wotif) by Expedia.
AAoA CEO, Richard Munro, said, “The acquisition may trigger major commission rate increases, flowing onto consumers and the Australian tourism industry with higher rates.
“With less competition, higher commission fees and reduced hotel margins, this cannot be good news for consumers.
“The AAoA, the AHA and TAA all believe that Wotif is a well-established and high profile agency for accommodation bookings in Australia and is an important competitive player in the market, constraining international efforts to control the Australian industry.
“Rejecting the acquisition would have maintained choice for accommodation providers between multiple, foreign and Australian operators with different commission models for selling their rooms online through third-party websites,” Munro said.
AHA Western Australia CEO, Bradley Woods, also has significant concerns.
“The acquisition may trigger major commission rate increases, flowing onto consumers and the Australia tourism industry. Higher commission rates are bad news for consumers,” he said.
“Currently Expedia is estimated to hold 10% of the Australian hotel portal market. With the acquisition of Wotif, Expedia will grow to 45%. Another major competitor, Priceline, is believed to have approximately 40%. With a successful acquisition the two companies may have up to 85% of the Australian market.
“This acquisition removes choice for accommodation providers between foreign and Australian operators and different commission models for selling their rooms online through third-party websites.
“The growth in meta search engines does not guarantee more competition or protection from massive commission rate increases, as OTAs are already buying meta search companies and consolidation creep is already happening.
“The movement is definitely towards consolidation and that means that OTAs may inevitably push up commission rates from the 11-12% currently towards the 18-25% that is more typical in the USA and Europe.
“The end effect of acquisitions and concentrations of market power into two or three companies will be that the consumer may end up bearing the cost of less competition.
“The hotel and accommodation industry is also concerned about the emergence of rate clauses into hotel and OTA contracts by which OTAs demand that hotels not be allowed to offer better rates to consumers through their own hotel owned websites or booking systems.
“This is a matter that the industry has already raised with the ACCC and will now be the subject of further and substantial discussions with the Commonwealth Government and the ACCC as it is clearly contrary to Australia’s competition and consumer law principals,” Woods said.