Split With Meriton To Cost Wotif.com $1 Million

Meriton, Australia’s largest apartment company, has split with Wotif.com in a dispute it estimates will cost the online agency $1 million a year in lost commission. Matthew Thomas, National Manager, Meriton Serviced Apartments, says Wotif.com pulled Meriton’s inventory after prolonged disagreement over access to inventory and rate. “It was six months in the making,” says Thomas. “We agreed to disagree and they removed our product. Whether it is permanent or not, who knows. When Wotif walked away they lost four of their top revenue generating products. They walked away from $1 million in commission.”

Thomas says it was a matter of control for Meriton, which had been negotiating terms directly with Wotif.com CEO Robbie Cooke, who declined to comment for this article. “As a hotel operator we reserve the right to dictate what, when and how we sell the product whether it is offline or online. Unfortunately the terms and conditions put on the table were too rigid for our liking and did not suit our distribution policy. The problem we had with Wotif is it’s all or nothing. They want everything – the entire inventory: every apartment, every room type, every rate.”

Meriton wanted flexibility, the ability to sell whatever product it wanted through whatever channel it wanted at whatever price it wanted depending on demand, an approach that means not all its inventory would be available through online travel agents 100% of the time. “I guess at the end of the day we want to take control of our inventory. We want to work with Online Travel Agents but not just be dictated to via email.”

It was a tough decision for Meriton to make and there have been significant repercussions for the company, which owns and operates more than 2000 serviced apartments in Sydney and the Gold Coast. Meriton, owned by billionaire Harry Triguboff, is also Australia’s largest builder of ‘for sale’ apartments. “It has impacted on our business and what it has meant we are all having to work harder. It’s our off season so it’s hard enough as it is. However, I believe this short-term pain is going to have some substantial long-term gain.”

Thomas says Wotif.com also took issue with Hotstayz.com.au, a non-brand website powered by Siteminder’s Booking Button that Meriton has launched to sell its serviced apartment inventory. “They saw it as a third-party site,” Thomas says, adding that Meriton is looking for suppliers with similar product outside Sydney and the Gold Coast to come on board. Commission would be 5% – half that charged by Wotif and much less than US-owned online travel agents.

Meanwhile, Wotif.com was central to another dispute over hotel rates and inventory during its latest heavily promoted three-day sale last week. OTA rival Expedia Australia demanded deal parity from hotel clients participating in the promotion and pulled the inventory from its website of those that didn’t comply. Complicating the scenario is the fact Wotif.com demanded pricing/deal exclusivity as a condition of participation. As a result many leading properties including an number owned or managed by Mantra and Mirvac  were switched off by Expedia for the duration of the sale.

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13 thoughts on “Split With Meriton To Cost Wotif.com $1 Million”

  1. The impact of Wotif loosing Meriton’s inventory will be negligible. Few consumers go to an aggregrator like Wotif to buy a brand. They go there for the best deal.

    Meriton fail to understand the economics. Their void will be filled by other operators who will more than make up the difference.

    The biggest impact will be felt by Meriton, especially if the they fail to sell their inventory through other means.

  2. Congrats Meriton – Wotif and co. are generating anti-competitive behaviour by demanding rate/availability parity – ergo everyone looses!
    Glad to see some of the big boys are standing up for their rights!

  3. Yes Tom, it is an interesting question about what the buyer is really buying. Hotels on Wotif are just a commodity. Like any commodity there are grades and prices. Buyers look for the best price/grade trade off along with proximity to location. As long as Wotif has product and prices that entice they will be fine. If this were to signal a mass exodus… then you would have a revolution, which would be interesting.

  4. Serviced apartments category is massive and growing. Meriton is a big loss for Wotif – whichever way you look at it. Sure, the void will be filled, but with the high occupancy rates currently experienced in capital cities, suppliers have more negotiating clout than ever. Tom, I’ll have to disagree with you on this one. As a business traveller, quality serviced apartments are an important part of the mix. I probably wouldn’t bother with an aggregator site that didn’t have the key players.

    Having said all this, my bet is that they kiss and make up.

  5. Paul, as a business traveler I also agree that quality is important, but one less provider in the mix will not deter myself or others from booking with a Wotif, especially if they are regular customer. If a few more pull out then it’s possible that there could be a negative affect on Wotif’s bottom line. However, with a bit of smarts, they could also easily recommend other options for discerning travellers to consider that would keep them happy.

    Brands are free to do what they want and should have the flexibility to name their own terms. Being too dependent on any single provider/channel (like Google) is never good for long term success. All the power to Meriton.

  6. Well may he say ‘Wotif walked away from $1 million dollars” but nothing will save Matthew Thomas if he can’t make up $10-$15million dollars is sales.

    I hope he has a good reason – because $15 million is probably a larger percentage of Meriton’s sales than the effect on Wotif (which would be far less than $1 mil i think, given other properties will simply take the volume vacuum)

  7. On the three day deal item raised at the bottom of the article. How did Expedia know what hotels were part of the promotion, so they could pull their inventory from their site? They cant of guessed?

  8. Something tells me Thomas won’t need saving.
    Wotif is a domestic powerhouse but globally insignificant as an OTA.
    Since Meriton is also a domestic only brand, they’ve simply channel shifted guests direct to their own voice/web channel – granted some unavoidable leakage.
    I guess now Meriton will forge stronger relationships with the international OTAs who will deliver longer staying/higher paying guests.
    Thomas is a pioneer and well trained by Accor and this would have been carefully planned and calculated – As for other brands doing the same thing?
    I think its when, not if.

  9. I don’t really get it – why leave wotif, who charge 10%, and try to get more business from international OTAs who charge 25%? They can try to get the volume through other channels but at less than 10%? It doesn’t make sense and there must be something more to this.

  10. @Martin Kelly – Booking.com is a Dutch site, and Agoda is SE Asia (Thailand or Vietnam).

    Meriton has incredibly strong corporate/group business that always come direct – it will be difficult to replace the Wotif guest immediately, but notice Thomas said it had been coming for 6 months. That’s 6 months worth of prep for the Meriton sales team – 6 months of targeting Wotif customers to create a leisure database who previously booked through Wotif, then splash out with an email blast offering 10% discounts (or more initially) which is the same as Wotif commission and doesn’t slug the guest with a booking fee. If other Hotel chains are smart, they’ll target Wotif customers in the same fashion and get rid of TPI’s/OTA’s.

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