Hostelworld, the world’s largest seller of backpacker accommodation, is facing a rebellion by key suppliers in Australia. The country’s four biggest backpacker operators – Base, Nomads, VIP and YHA – have agreed not to sign new ‘take it or leave it contracts’ from the Irish based online travel agent that, among other things, demand last room availability.
The ‘Big Four’ urged fellow members of the Backpacker Operators Association NSW to also sit tight until the legalities of the controversial new contract, which replaces one that has been in force for the past decade, have been clarified.
The bust-up comes at a crucial time for Hostelworld, which also owns Hostels.com and is seeking regulatory approval for its proposed purchase of Hostelbookers.com.
The company would have a virtual global online monopoly on the backpacker space – at least in terms of branding and positioning – if that transaction was given the green light.
It’s a sensitive subject – no-one wants to see a single company dominate – and whatever goodwill the industry had for Hostelworld is rapidly dissipating with the way it has handled the roll-out of its new terms and conditions.
“They’ve really had a take it or leave it approach,” said Robert Henke, the Operations Manager of YHA, which has 90 properties in Australia, and is also Honorary Secretary of BOA NSW.
“The contracts have been sent by email with a ‘click here to agree’ button.
“There’s no option to change the contract.
“Just take it or leave it.
“If you don’t agree you get another email that says you have to sign or we will take you off the website.
“We think that is heavy handed.”
It could also be devastating for some businesses, especially smaller operators who depend heavily on Hostelworld for bookings.
Mr Henke said Hostelworld has “a very strong position” in the backpacker market but Booking.com and Wotif.com have been increasingly active.
He added there’s been no consistency in terms of timing – some operators have received the new contracts while others are still waiting, a situation which seems to have been replicated in other parts of the world.
Mr Henke said the new contracts, which also apply to Hostels.com, were difficult to decipher.
For example, there is confusion in how it will impact on the different fees Hostwelworld charges.
At present it takes a 10% commission for bookings from suppliers and charges consumers a $2 booking fee.
However, it appears that Hostelworld wants to give itself an opportunity to charge higher commissions to operators in return for improved site visibility.
It is also requesting consent for use of proprietary trademarks and brands.
So it’s a lot for small businesses to digest and BOA NSW wants its members to take a united approach.
A meeting last week, attended by 35 operators controlling 13,000 beds, voted unanimously not to sign the contracts until legal advice had been received by BOA.
Kristy Carstairs, regional manager Oceania, Indonesia and Philippines for Hostelworld.com, declined to answer questions and directed all queries to the Irish head office.
TravelTrends.biz subsequently emailed several questions to Carmel Dunne, the VP Accommodation Relations at Hostelworld.com, and here is an edited version of her written response.
“The contract roll out has been in line with all other notifications and contract changes successfully completed in the past,” Ms Dunne wrote.
“Some of the main elements of our current contract are over 10 years old and simply put have not kept pace with the evolution of the online travel market.
“Property owners are free to accept or decline the new contract.
“It’s their choice.
“Many have signed up. The fact that some seem willing to walk away is evidence of a free market working.”
In terms of one-size fits all approach, regardless of scale or booking volume, Ms Dunne said this has always been the way Hostelsworld has done things and there’s no need to change.
The reason it has been sent out in a staggered manner rather than simultaneously “allowed us to be able to respond directly to the queries that came from property owners.
“We are working through the new terms with property owners as expeditiously as possible.”
In conclusion: “We want to get the new terms wrapped up and agreed as soon as possible so that we can work with the market to keep properties busy and profitable. ”
Hostelworld currently works with 35,000+ contracted properties.