The hostel industry is abuzz with the joy of militancy following a victory for operators over a disputed and despised contract HostelWorld.com has now revised to exclude, most significantly, the demand for rate parity. “To my knowledge they are the first OTA in the world to do this,” said Robert Henke from the Backpacker Operators Association of NSW.
It’s a major victory for operators, who banded together and refused to sign the contracts unless changes were made.
The rebellion started during June and July in Australia, before spreading via chat rooms and email to Europe and South America.
All over the world operators were up in arms and angry.
Not just with the terms and conditions but also to what they termed Hostelworld’s “take it or leave it approach”.
Hostelworld buckled six weeks later in early September when its CEO John O’Donnell conceded defeat without actually saying so.
In a letter to operators , he acknowledged “that the planning, communication and timing of the new contract roll out could have been better”.
He added: “The primary modifications to the terms and conditions include removal of the price parity clause, changes within the availability clause to allow for operational challenges, changes to the tax clause, the inclusion of the ability for properties to exclude themselves from PPC online marketing activity, and the increase from 14 to 28 days notice requirement for future contract alterations.”
They also amended the clause on last room availability (“as far as operations allow”) to give operators wiggle room.
Now operators want to ram home the advantage, strike while the iron is hot, and through its international association, STAYWYSE, have issued a code of practice – Resetting the Relationship: establishing fair practices in online distribution – that Robert Henke from BOA says is designed to correct imbalances in the “relationship between OTA’s and accommodation operators”.
It was developed at World Youth & Student Travel Conference in Sydney last week, where there was a lot of discussion and concern about “imbalanced contracting terms” from OTAs.
“Online Travel Agents (OTAs) and youth travel accommodation operators are mutually dependent,” it says.
“Nevertheless the accommodation operators are the ultimate providers of the product; they alone should determine where it is sold and at what price.
“There is thus a need for a sensible reset to be found in a relationship which, over time, has become less and less commercially balanced.
“A number of fair practices need to be established to ensure product sovereignty rests with the operators.”
It recommends agreements between OTAs and youth travel accommodation operators should not contain clauses that:
- Allow the use of property or brand names in online advertising, unless specifically authourised
- Require rate parity
- Enforce mandatory availability parity (either via last room availability or minimum allocations)
“We have made progress and Hostelworld have come to the party,” Mr Henke said.
“I think they were astounded by the push back from operators not only in Australia but also South America and Europe.”
Mr Henke said the united front would not have been possible without the internet.
He said there are lessons for other industry associations and sectors.
“They are very big players, these OTAs, but at the end of the day they are dependent on the inventory operators provide.”