john-guscic-webjetWebjet, one of Australia’s leading online travel agents, has rejected the concept of rate parity and says it will continue to undercut hoteliers on price – whether they like it or not.

Managing Director John Guscic declared: “The supplier does not have a monopoly on price. We price our hotels as we see fit. We sell at a price I determine. That’s competition, we love competition.”

Mr Guscic said Webjet, which dominates Australia’s online airfare sales market and now wants to increase hotel revenue, has already rejected numerous requests from hoteliers to stop beating them on rate. “Yes, we have had many hotels write to us complaining about our pricing policy (and) our reaction is ‘no, we’ll price how we see fit’.”

“My view is a simple, straightforward position: Webjet determines pricing of hotels it sells on its site. We have no agreements with anyone that precludes me from selling at a specific price.” He said there’s no reason for Webjet to consult with hotels when it discounts their property. “How would I do that?”

The key point here is that Webjet has no direct relationship with any of the hotels it sells. Everything is done at arm’s length because all Webjet’s hotel product comes from third party distributors such as Orbitz, Expedia, TUI, GTA and Tourico. They handle the supplier relationships and in an ironic twist are most likely getting undercut themselves.

Webjet has been routinely discounting hotel product s since re-launching its accommodation offering late last year. The most common discount is 12.5% which Webjet funds itself. “That’s our business model,” said Mr Guscic.

As a result of this strategy, supported by high-profile marketing, Webjet’s hotel sales have been growing quickly, although it is still a relatively small player in the accommodation space. Mr Guscic said Webjet is now selling around $2m worth of rooms a month, more than 10 times what it was doing last February.

“We are delighted with the progress we have made,” he said.

The whole issue has come to light following what Mr Guscic describes as a “tawdry affair” involving SkyCity Casino in Auckland, which asked Webjet to stop undercutting it after being alerted to a pricing discrepancy by online accommodation giant, Wotif.

As for the concept of price parity – where suppliers offer the same rate across all sales channels – Guscic said: “I’m not aware of that practice. It doesn’t apply to me. That’s all that matters.” He concluded: “We will continue to price at a point to meet the business objectives of Webjet.”

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