Commerce Commission decision not enough to help NZ hoteliers
On October 28th 2016, the New Zealand Commerce Commission ended an investigation into rate parity clauses that Expedia and Booking.com have with New Zealand accommodation operators.
Previously the contracts stated that NZ operators had to advertise all rooms at the best rate with the online travel agents (OTAs).
What was the decision?
The concessions that the NZ Commerce Commission laid out in their decision, allows NZ accommodation operators to offer lower prices than those advertised on Booking.com and Expedia. It also rules that NZ operators no longer have to offer all available rooms on Expedia and Booking.com.
Why is it not enough?
Many New Zealand accommodation operators are arguing that the decision did not go far enough in stamping out anti-competitive behaviour by the two largest OTAs globally.
Properties still face ‘narrow’ rate parity clauses, where a property can not advertise lower rates through any channels, online or offline. The lower rates can only be offered via direct contact with the customer. These can only be via phone calls, walk-ins or emails. Those channels collectively account for less than 2% of the total booking market.
In the wake of this decision, smaller independent properties are the most impacted by the existing rate parity clauses. Larger groups like Hilton and Copthorne with closed member loyalty schemes can continue to offer deals that are not present on Expedia or Booking.com channels.
Why the lack of consultation with NZ Industry Groups?
Neither Hospitality NZ or Tourism Industry Aotearoa (TIA), two bodies who represent New Zealand accommodation operators, were consulted by the Commerce Commission during the decision-making process.
What is happening overseas?
So, to summarise, the current state of play in Europe and the US:
> France – All (broad and narrow) rate parity outlawed. Previous clauses were considered “anti-competitive”
> Germany – Broad rate parity outlawed and Booking.com’s narrow rate parity clauses outlawed.
> Italy, Sweden – Broad rate parity outlawed.
> Elsewhere in Europe – Booking.com and Expedia elect against enforcing broad rate parity. On July 13th 2016, it was announced that regulators in the UK, Belgium, the Czech Republic, France, Germany, Hungary, Ireland, Italy, the Netherlands and Sweden have begun participation in a European Commission project to monitor pricing issues in the hotel sector.
> USA – rate parity clauses still in effect.
What should we consider going forward?
Although OTAs do offer a huge global channel for accommodation operators, the operators do pay for it. It is reported that around $150 million is paid in commissions by operators on bookings to OTAs every year. The accommodation industry has complained that there has been no direct benefit to the industry here in NZ, with the funds just going overseas.
If we look overseas to Europe and Canada, the dominance by Expedia and Booking.com has meant that commission rates on each booking are as high as 25%, increased from the original 10%. Currently, commission rates in New Zealand sit at around 15%, so there are justified fears that this may increase.
With Tourism being our largest and fastest growing industry, is New Zealand giving away too much to offshore interests unnecessarily?
Nik Kiddle, an operator in Queenstown is gathering interest within the industry. If interested contact him at [email protected]
Subscribe to our newsletter
Other Blogs you may also like
Fill Your Empty Rooms With Preno’s New Last Minute Pricing Tool
If you’re in the hospitality industry, you understand the pain of vacant rooms. Every empty room is lost revenue, and in a competitive market, it’s crucial to ensure maximum occupancy while maintaining reasonable rates. That’s why we’re excited to introduce Preno’s latest addition to our Dynamic Pricing suite: Last Minute Pricing. This proactive tool reviews […]
Why personalising a guest stay is important and how to do it
In the tourism industry today all properties big and small must offer a personalised service. It is no longer only expected in the luxury sector. Offering a personalised service is an important way of showing your customer how much you value them. As an accommodation operator, you are selling both a product and a service. […]
Top Features of an All-In-One Hotel Property Management System
If you manage a hotel, then you know how important it is to have a good property management system (PMS) in place. A PMS can help you keep track of your inventory, guest information, bookings, and more. It can also help you save time and money by automating some of your front desk operations. There […]
How Does an Accommodation Booking System Work?
An accommodation booking system is a digital system that helps manage the reservations and bookings for accommodation providers such as hotels, resorts, hostels, and vacation rentals. This type of system can be used by both guests and staff to make searching for and booking accommodations much easier and more efficient. There are many benefits of […]
Motel decorating ideas: 5 room styles to rejuvenate your property
Searching for inspiration to refresh your motel room design? Whether you’re a new or existing motel owner, you’ve landed here because you’re searching for unique and inviting motel interior design ideas. And you’ve come to the right place. When considering how to decorate a motel room, remember that your property is a home-away-from-home. When travellers […]
UK’s First-Ever ‘Tourist Tax’ Goes Live in Manchester: Here’s What You Need to Know
In an interesting move for Manchester’s tourism industry, the city has introduced a “tourist tax” for visitors. Manchester is the first city in the UK to implement such a scheme, which will see an additional £1 charged per room, per night for accommodation costs. The funds raised from this extra charge will be used to […]