The last domino has fallen – Australia’s most powerful inbound tour operator and wholesaler, the AOT Group, has increased the commission on all rooms booked through NeeditNow.com.au from 10% to 15%, bringing it into line with all major rival sites.
The move follows recent commission increases from Booking.com and others, highlighting the folly of the ACCC’s claims that Expedia’s acquisition of Wotif late last year would have no impact on commissions.
“With the consolidation of the Online Travel Agent space, commission levels and distribution costs have increased and we wish to bring all suppliers in line with the industry standard of 15%,” AOT recently informed key hotel suppliers.
Chief Operating Officer Cinzia Burnes confirmed the change yesterday.
While NeeditNow is a relatively small consumer site it has disproportionate industry clout because AOT group is using it as a platform to distribute dynamic accommodation rates across many of its brands including Need To Escape, TravelMate, NSW Holidays, TravelPoint, Sunlover Holidays, Air New Zealand Holidays and Territory Discoveries.
NeeditNow also provides AOT’s dynamic hotel rate offering to all Federal Government employees, who are obligated to book their rooms through AOT, which was recently re-awarded the lucrative Whole of Government accommodation contract – worth an estimated AUD126m per year.
The move upset some prominent hoteliers, who were originally given eight days notice of the rate hike, later extended, which ended up coming into effect last week on June 1.
Ms Burnes said most of its contracted hotels had already already been paying 15% on NeeditNow and that the latest commission update applied to around 15 suppliers who were still on 10%.
At this stage the vast majority of AOT’s government bookings utilise static, pre-agreed net rates that the company marks up by, say, $15 to $20 while absorbing transaction costs.
Logic suggest by increasingly transitioning this government business to online at 15%, AOT stands to make more money per booking.
AOT inbound and domestic wholesale commissions remain much higher at 25%+.
The company is many times larger than its nearest rival and wields enormous power.