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BHA slams OTAs for ‘stifling competition' when booking hotels

24 April 2015 by

The British Hospitality Association (BHA) has hit out at a decision by EU competition authorities to enforce rate parity with online travel agents (OTAs).

On 22 April, the competition authorities in France, Italy and Sweden agreed to commitments offered by Booking.com following a series of investigations into their market dominance. The commitments allow Booking.com to prohibit hotels from marketing and offering hotel rates at a discounted rate on their own websites.

This latest European decision follows an acceptance from the Office of Fair Trading (now disbanded) of formal commitments regarding price parity by InterContinental Hotels Group (IHG), Booking.com and Expedia, in January 2014. The commitments enabled OTAs and hotels to offer discounts on rates for hotel rooms, under certain conditions.

Jackie Grech, legal and policy director at the BHA, said the industry is "deeply concerned" that OTAs are stifling competition through high commissions, rates and service parity, and by manipulating search results and ratings to attract customers to book with them.

"Hotels, especially small independents, must either sign-up to sell rooms through OTAs and fork out up to 35% of their total room costs or face invisibility online," she explained.

"Customers and hotels alike will benefit from transparency and fairness. The authorities' decision to uphold rate parity was not a meaningful solution and doesn't return freedom to the market.

"While we acknowledge the effort of the competition agencies to consider this area, these commitments fall short of progress and will not benefit customers or hospitality businesses in a meaningful way. We all want the same thing: a competitive and innovative market for hospitality and tourism, these commitments missed the mark in aiding that goal."

Leading OTAs such as Expedia and Booking.com now have the ability and funding to control online search results by purchasing key word searches. As a result, when customers search for a hotel by characteristic or by the name, the top search result isn't the hotel itself but rather the online booking agent, leading to a growing majority of customers are driven to book through the online agent's sites rather than through the hotel's own website.

The BHA said that as a consequence of this need for hotels to use online travel agents, hotels and customers are bullied into accepting expensive conditions.
As well as hotels having to pay commissions of up to 35%, they are also not allowed by the OTA to offer rooms to customers who book directly at a lower rate. The result is higher prices and less option to negotiate better deals with customers.

The BHA is calling for a solution that benefits both businesses and customers. "We will continue to together to ensure online travel agents offer one-stop shopping for customers, but at a price that both hotels and customers find acceptable - 35% of a room booking is too costly, and losing the right to offer discounts and specials to customers who book directly is not in our guests' best interest."

OFT accepts price parity commitments from IHG and OTAs >>

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