OTA Commissions Won’t Rise? ACCC Looks Foolish After Latest Rate Increases

The ACCC – Australia’s so-called competition watchdog – is looking naive and ignorant after Hooroo this week became the latest online travel agent to raise its commissions following Expedia’s acquisition of Wotif while industry giant Booking.com is telling some operators its rate in major markets will increase from 12% to 15%.

When the ACCC approved the Expedia-Wotif deal it “noted the concerns raised by market participants that Wotif’s … removal from the Australian market may result in them paying higher commission rates to online travel agents.

“However, the ACCC found that there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years,” said Chairman Rod Sims said.

“This has included new entry by a number of competitors and business models, including Booking.com, which has grown quickly to become the largest OTA in Australia.”

The hotel industry strongly disagreed – and have been proved right.

Expedia raised Wotif’s commission from 12% to 15% in February, a move that was quickly followed by Agoda hiking its rates.

Now Hooroo, the Qantas Group’s accommodation website, has advised hoteliers that its base commission will rise from 10% to 13.2% from July 1.

It’s doing this “to ensure we can continue to invest in the growth of the Hooroo business in the highly competitive OTA market in which we compete.”

News is also filtering out that Booking.com has advised some hoteliers that it’s increasing commissions in certain major Australian markets – Sydney, Melbourne and the Gold Coast, for example – from 12% to 15%.

And why wouldn’t it?

Booking.com is Australia’s largest online travel agent – it delivers more business to hoteliers than any other company – and there’s no sane reason to stay on 12% when its two major competitors, Expedia and Wotif, are charging 15%.

You’d do the same, surely.

Yet somehow the ACCC thought commissions wouldn’t rise because there’s “more competition” when clearly the opposite is true.

Naive, ignorant and plain dumb.

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4 thoughts on “OTA Commissions Won’t Rise? ACCC Looks Foolish After Latest Rate Increases”

  1. Hooroo makes less than 1% of all bookings.. this is hardly ACCC worthy and isn’t going to have any effect what so ever!

  2. Basically I think many of us forget the huge advertising benefits OTA’s bring to us, all at their own cost unless they snare a booking. Wind the clock back a few years and we may just remember we all used to have to pay an annual fee to be listed in an agents printed directory, along with commissions of almost 30%. In addition to setting our prices 18 months in advance and waiting for 60 days to receive payment! How quickly we all forget! Now we pay no annual fee, half the commission, change our prices daily and receive instant payment in most cases. Why are we complaining? Perhaps because the internet has made us visible to our clients and each other and subsequently increased our competition. We have collectively driven down the price of accommodation to beat our neighbour and therefore our margins are now less. So we look for our biggest expense, eg OTA commission, and blame them for our lower profit. We also have no loyalty, therefore the OTA’s are competing amongst themselves to grab the traveller to cover the cost of their marketing efforts. Maybe if we picked one OTA to be loyal to, we could negotiate a better rate and everyone wins. Or perhaps increasing our rates to a more realistic price will solve everyones problem as the OTA’s 12% would yield more income if our rates were higher so they may not need to increase their commissions as they will earn more by default.

  3. And talking about comparing apples to pears – we need to remember that Wotif took a AUD 5.50 booking fee from the client in addition to the 12%. On a AUD 100 room, that’s a lot more than 15% – never mind that it was applied to the client and not to the hotel.

    “ACCC chairman Rod Sims said on Monday that Wotif’s commission rates had been trending higher before the takeover, and it had charged consumers a $5.50 booking fee that its competitors did not which made the “comparison of commission rates not quite apples with apples”

  4. Its the OTA’s competing with each other. But the service provider (hotels, hostels etc.) are paying the price. So, the answer is simple: Add the commission on top of your actual prices. At your hotel/hostel, you will receive the regular price. And the OTA’s will have to compete for the best offer, name it: the lowest commission to offer attractive prices to the costumer.

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