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Labor Party pledges to end rate parity if elected

Accommodation Association of Australia CEO Richard Munro

A Bill Shorten-led elected Labor government in Australia will end the practice of rate parity in Australia and allow accommodation providers to compete and set their own room prices independent of contractual clauses imposed by Expedia and Booking.com, it was announced today.

The move has been heralded as a “breakthrough” by the Accommodation Association of Australia, with CEO Richard Munro welcoming the announcement, saying the organisation has been lobbying for years, most recently appearing at a Senate inquiry in Melbourne on the matter.

“Effectively this means that our industry, should the Labor Party win office, be able to finally offer the best rate directly to our customers without fear of being darkened or threatened by these big multinational OTAs.

“This announcement is very welcome for our members and the industry across Australia. The winners will be the operators of small business and the public who can finally get a better deal by going direct online once this legislation is passed.”

Hotels such as the Manly Marina Cove Motel will be able to compete with online giants if Labor is elected.

Speaking at the Manly Marina Cove Motel in Brisbane, Shadow Assistant Treasurer Hon Dr Andrew Leigh referenced the current situation, where up to 85 per cent of online accommodation bookings are controlled by two entities – Expedia and Booking.com – who can contractually stipulate that no accommodation provider can issue rates below what they charge on personal websites. The practice, known as price parity, threatens hotels with “darkening” or pushing their hotel listing to the back of search results, which can be many dozens of pages deep.

In addition, platforms such as Expedia (whose brands also include Trivago, Wotif and Hotels.com) and the Priceline Group (which operates the Booking.com brand) are charging up to 30 per cent of the fee paid by travellers as commissions, Labor said.

Similar imbalances have already been acted on by several European countries, including Germany, Italy, France, Sweden, Belgium and Austria, which have all banned price parity clauses.

“A Shorten Government will give local accommodation providers greater control of their own businesses,” Dr Leigh said.

“By allowing travellers to book cheap rooms direct, we’ll improve choice, and lower the price of a weekend away.

Proposed legislation will prevent online hotel sites from forcing hotels to offer rates higher than theirs.

“Our local hotels want to be as hospitable as possible, but they’re paying a huge chunk of their revenue to the booking platforms and losing their direct contact with guests.”

Munro added: “Up to this point the only way to offer our customers a better rate was via telephone, walking in or via a hotel loyalty program, but customers are booking online and not getting the best deal at all!

“The fact that any operator of accommodation is unable to sell a lower rate online is an outrage and does not pass any fair test and the public are getting a dud deal when they do not book direct or via a bona fide ATAS accredited Australian agent.”

Separate to today’s announcement is the ongoing ACCC investigation, which is now considering the introduction of the Competition and Consumer Amendment (Misuse of Market Power) act 2017 legislation.

HM has reached out to Expedia and Booking.com for a response.

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