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Commerce Commission’s stance on OTAs weak – AA

Commerce Commission’s stance on OTAs weak – AA

The Commerce Commission’s acceptance of a partial concession by two global online travel agent (OTAs) giants to amend contracts with their Kiwi clients does little to benefit tourism in New Zealand.

The commission has ended an investigation into Expedia and “parity clauses” that have prevented Kiwi businesses from offering their accommodation in different channels with price variations.

In return the global OTAs have slightly tweaked their rules enabling accommodation providers the ability to offer lower rates for walk-ins or phone bookings.

However, OTAs still require the operators to guarantee them rate parity with any advertising they do, including on their own business website. This means while the Kiwi businesses are seemingly free to offer a cheaper direct booking rate, they can’t tell their customers about it unless they visit or call.

AA Traveller’s Travel and Tourism General Manager Grant Lilly says the offer accepted by the Commerce Commission does nothing to reduce global OTA market dominance and anti-competitive behaviour.

“That’s not a situation that looks like real competition to us,” Mr Lilly says.

“Accommodation providers should be able to choose any advertising or marketing medium they like to reach their customers with the messages and prices of their choice.”

“OTAs have held Kiwi accommodation providers to ransom for years, taking hundreds of millions of dollars offshore in commissions with no direct benefit to the industry in which they make their profits,” Mr Lilly says.

“The OTAs have required accommodation providers who list on their sites to make all rooms available through them, charged about 15% commission, while denying them the ability to differentiate their offer for customers who book through any other channel.”

Mr Lilly says the entire tourism industry here should be allowed to manage their bookings activities on a level playing field, not one that is tilted in favour of global OTAs because of the restrictions they impose on suppliers.

The main benefit of a property listed with an OTA is exposure to a huge audience, however, any bookings that result have come at significant cost, with an estimated $150 million paid in commissions to the OTAs by the industry here, every year. Accommodation providers have been, and now still will be, between a rock and a hard place – they’re told to either play by OTA rules or don’t appear on their listings. There’s no negotiation.”

Mr Lilly says smart businesses work hard to ensure their bookings come from a wide range of channels. This allows them to positively influence their business results, and not become captive to the low cost/high volume OTA channels.

Mr Lilly says the close of the Commerce Commission investigation into the global OTAs, without having opened to wider industry consultation, does a disservice to all accommodation businesses – big and small – in New Zealand.

“Tourism is our largest and fastest growing sector. Surely we should be finding ways to add value to that growth, not hobbling it with restrictive practices controlled by offshore companies.”

AA Traveller has helped Kiwis see the best of New Zealand for more than 100 years. It publishes and distributes more than three million guides and maps every year, and provides travellers with a wealth of information to inspire and assist them in planning travel and to make bookings at more than 1800 properties on or at any AA Centre.


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