Wotif Commissions To Rise By 25% As Expedia Rolls Out New Contract to Hoteliers

Expedia is attempting to move all Wotif.com contracted properties onto a single company-wide contract and is raising site commission for larger producers from 12% to 15% – an increase of 25% – four months after buying the Australian OTA.

“We are in discussions with them at the moment and there are a number of matters that need resolution, both commercial and legal,” said one leading hotelier.

He confirmed that Expedia is looking to charge hoteliers the same commission across all its sites.

Expedia has also told hoteliers that from March – date to be finalised – all Wotif.com bookings will be powered by the Expedia platform.

It has requested the new contract be signed ahead of this transition but has not been clear in correspondence about what happens to properties that don’t.

The widely anticipated move was flagged by accommodation lobby groups in submissions to the Australian Competition and Consumer Commission, which subsequently approved the deal.

“The ACCC noted the concerns raised by market participants that Wotif represented an important source of bookings for some accommodation providers and that its removal from the Australian market may result in them paying higher commission rates to online travel agents (OTAs),” ACCC Chairman Rod Sims said.

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

“Metasearch websites increasingly facilitate hotels’ ability to promote themselves alongside OTAs, and transact directly with consumers,” Mr Sims said.

“The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry.

“Disruptive developments from smaller OTAs and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future.”

In summary, “the ACCC concluded that the proposed acquisition was not likely to result in a substantial lessening of competition.”

Expedia is telling hoteliers: “In an effort to streamline how we work together, we are offering a simple and attractive compensation structure and interface for each Expedia® Collect™ booking made on Expedia group websites, including Wotif.com.

“What will change?

“You can look forward to having:

  • “A single level of compensation – same compensation for bookings made on all of Expedia group websites, including Wotif.com
  • “A contract covering bookings on all The Expedia group websites, that also adds bookings for Wotif.com
  • “One tool for all of your interactions with Expedia – in Expedia® PartnerCentral you can manage your rates and availability, content and accounting as well as access reports on your competitive performance
  • “One point of contact for all of the Expedia group brands, supported by our dedicated support teams”

There’s been a sense of inevitability in the way the Australian hotel industry has accepted the change.

Some are even looking on the bright side.

“At least it’s not 25% – there would have been a revolt,” said one.

An Expedia spokesperson said hoteliers have generally responded well to the change.

“The feedback and support we’ve received from hotels, who acknowledge the benefits of a partnership with Expedia, has been very positive,” she said.

“We are introducing the Wotif Group supply partners to the power of Expedia’s global reach and customer base and we make significant investments in marketing and technology innovations, all of which drive increased customer demand for our hotel partners.”

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10 thoughts on “Wotif Commissions To Rise By 25% As Expedia Rolls Out New Contract to Hoteliers”

  1. Surely there’s room for a new Wotif-type challenger to emerge from the ruins here. Get back to the basics of what made Wotif successful in the first place – High Volumes of distressed inventory on low commissions. It just needs a little bit of vision, a chunk of capital and the collective goodwill from the industry to get it off the ground. Once it becomes public knowledge that this new site has the best rates – it wouldn’t need to compete as strongly on PPC advertising. Can someone smart start this please with commissions under 10%?

    1. But what about our old friend rate parity? I can’t see hoteliers allowing an OTA to undercut them while the big boys would surely react by pulling offending hotels from their site until the disparity was rectified. It’s happened before…

  2. I wonder how the OTA s would respond if all Hotels withdrew in mass? Remember they only exist because they are supplied inventory

    1. The capital power of OTA has emerged from commisions paid by hotels. Without the goodwill from hotels they would not have the standing we see today. I urge hotels to change the approach toward OTA’s. Remember – they are not your partner, they are not your friend. They are in it for the money.

  3. This article has an interesting headline … was it wrong of me to laugh?

    Because as the Revenue Director of a (very busy) 5 star CBD Hotel, I can honestly say that I view many of these changes as positive:

    1. For years and years, we (Res/Rev Managers) have complained about the Wotif extranet, which will no longer be in use.

    2. Yes, Wotif commission is moving from 12% to 15% – however, we will no longer have to pay the charges associated with the Wotif virtual credit card payment system (around 3% give or take).

    3. Expedia commission is also reducing (or has already for some properties) from 17% to 15%.

    I am lead to believe that for a large number of hotels in CBD locations, Expedia and their affiliates produce a much higher volume of room nights than Wotif – (although not so for us just yet) – therefore from a bottom line position these changes will be a financial win.

    In the end though surely it is up to each Hotel to decide how/when/why we work with each OTA. Because as Rod rightly pointed out, we are not forced to provide rates or inventory – OTA listings should be viewed in much the same way we view RFP’s – establish your walk away rate and stick to it.

    Although when looking at the true cost of acquisition there are many instances where Hotels already pay close to or more than 15% to secure a room night from a volume corporate account – by the time the GDS pass through fee, salaries of the sales staff etc are accounted for. Although as P&L documents continue to remain fairly archaic in their set up, most of those costs don’t land in the area’s for which Res/Rev have KPI’s so they simply don’t care …

    It is a fascinating topic though. See you at No Vacancy in March!

  4. Rate parity is morphing into a very blurry area.

    Sign up for an OTA newsletter and get bombarded with $X discounts every day. OTAs also secretly discount hotel rates based on Login status, Device, Geo-location and metasearch referrals. Hotels do the similar tactics every day.

    The OTA space is ripe for disruption in my opinion. The big players generally offer no point of difference and its becoming too homogenised (and American centric). Bring on the challengers…. (wherever you are)

  5. OTA’s (the big players anyway) have done so well because they built websites the customer can use and enjoy using. They split test changes and make daily improvements to the booking experience. Customers enjoy their experience and return as they become loyal site users (but not hotel brand loyal).
    Have a look at how hard it is to book a night at say Fraser Suites Sydney Vs Meriton Kent Street Sydney, when both operators have the same technology platforms powering their sites and booking engines. Virtual tours, reviews, awards and other information that enhances the user experience and builds brand reputation while the user is on your site.
    Then look at how the above hotel operator (Fraser Suites Sydney) does against Booking.com… for $640 (tonight) Fraser showcase a massive two pictures, yes just two per room type (remember a pictures worth a thousand words) and a very limited room description – Same property on the OTA Booking.com has 38 pictures, triple the amount of hotel general / room product description, distance to key landmarks… and much, much more. All that extra content by the way… supplied and updated by the hotel staff – Booking.com didn’t take those extra pictures. Most hotels don’t want to invest time or money in their own website… when they do the OTAs will not be an issue, until then cough-up that extra commission.

  6. The trouble is, 15% commission is way too much. Most motels put up with 10%+ but it’s become a point now where these ‘middle man’ don’t do anything to deserve this. At the end of the day, they force everyone to compete price wise, they force ‘reviews’ and claim some how they are part of the motel. – I hope google improves their system and shows motels prices etc directly on each motels site.. it will wipe out all this.. At the end of the day, guests will be much better off booking directly with the motel.

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