Expedia and Booking.com agree to reinvigorate price competition
Following an investigation by the Australian Competition and Consumer Commission, Expedia and Booking.com have each reached agreement to amend price and availability parity clauses in their contracts with Australian hotels and accommodation providers.
The agreements extend to the largest online travel sites used in Australia for Australian accommodation including Booking.com, Wotif.com, Hotels.com, and Expedia.com and will remove barriers to price competition between major online travel sites for hotel bookings.
Parity clauses generally require accommodation providers to offer best price and availability to online travel sites. This guarantees the online travel site the accommodation provider’s lowest rate and prevents competitors and consumers from negotiating better deals directly with the provider.
“The ACCC commenced its investigation after accommodation providers raised a range of concerns, including that these parity clauses were anti-competitive as they stopped consumers from getting different prices from competing online sites,” ACCC Chairman Rod Sims said.
“Australian accommodation providers will now be able to tailor their offers to better meet the needs of their customers and their own businesses requirements. They will now be able to offer lower rates through telephone bookings and walk-ins, offer special rates and deals to customer loyalty groups, in addition to offering deals via Expedia and Booking.com.”
The ACCC conducted a range of targeted market inquiries, including an online questionnaire to Australian accommodation providers seeking specific information about their dealings with online travel sites. After reviewing over 500 responses and speaking with industry participants, the ACCC identified the key issues as the use of broad price parity and room availability clauses by online travel sites.
“The ACCC is pleased Booking.com and Expedia have agreed to amend the parity clauses in their contracts, because it will increase the incentive for them to compete with each other and allow consumers to shop around to get the best deal,” Mr Sims said.
From 1 September 2016, Expedia (which includes Wotif.com) and Booking.com have removed contractual requirements for Australian accommodation providers to:
- offer room rates that are equal to or lower than those offered on any other online travel agent
- offer room rates that are equal to or lower than those offered on an accommodation provider’s offline channels
- make all remaining room inventory available
- offer the same number and same type of rooms offered to any other online travel agent.
As part of its investigation, the ACCC sought submissions from Australian accommodation providers: http://www.accc.gov.au/update/accc-consults-on-online-travel-agents
