End of Rate Parity? Booking.com Opens The Door…

It’s a slow, hard day, right, just two or three days before Christmas, depending on where you are and how you’re counting.

But we all have obligations, and mine is to file the final TTNews for 2014. So what’s news? Well for my money one of the year’s biggest stories has just begun unfolding.

It’s the decision by Booking.com to make concessions on its rate parity policy, which was essentially that hotels that sold through its site could not offer cheaper rates anywhere else.

Well, Booking.com now says it willing to tweak that policy after some European governments started taking a look at this unarguably restrictive business practice (prevalent among all Online Travel Agents).

To pre-empt legislative action, Booking.com, the world’s most successful OTA, says it will allow hotel partners to offer cheaper accommodation rates on other OTAs if they want.

But, crucially, Booking.com will not allow hotel partners to undercut it on their own websites.

European industry bodies have reacted badly to the announcement.

They forcefully argue that every supplier should have the right to price however they want wherever they want, especially on their own website.

And there’s a compelling logic to this argument that is, ironically, actually reinforced by the Booking.com offer.

It’s a political compromise and weaker for it – because it doesn’t go all the way.

This compromise shows regulators that the major online travel agents (and their lawyers) acknowledge there is an issue, perhaps legally indefensible.

No doubt they will take heart from that and press even harder.

Therefore the decision by Booking.com to open the door on rate parity may well mark the beginning of the end of this contentious practice.

But don’t hold your breath – it could take years.

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5 thoughts on “End of Rate Parity? Booking.com Opens The Door…”

  1. Of course rate parity should exist. It is no different than any other advertising expense that directs the consumer to the hotels own site. So why should someone who uses booking.com pay more than a traveller responding to a print advert.

  2. Things may move along a bit in Jan when the German higher court announces its decision on the HRS appeal. The German authorities have, to date, been by far the least tolerant to rate parity and associated clauses.

  3. Anything which prevents suppliers (or indeed OTAs) from selling at whatever price they want is anti-competitive. The assertion that rate parity sets a consistently lower baseline for room rates is simply untrue. In the case of Skoosh, rate parity stops commission-sharing with the consumer (which is bad for the consumer). Keep at it, Dorian. anyone who knows about rate parity knows it’s a scam.

  4. OTA combined spend is in the billions on trying to educate consumers that their sites have the lowest rates. Rate parity would certainly shake things up and could perhaps create new opportunities within the distribution market.

  5. This is one of the biggest threats for Tourism industry.
    This will open the door to anyone who negociates with a hotel a rate & put it in a wholesaler who’s going to be shown on price comparision websites.
    The wealth will be redirected to distributors rather than hoteliers.
    So the ones who advert (pay at hotel) will start to reconvert on internet payment & they will enter in the “commission undercut” war…
    CONGRATS European Commission, you are transforming tourism into a forex like system…

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