By Daniel E. Craig, Reknown
There’s a revolution happening in France that could send shockwaves across the international hotel industry.
If the French government succeeds in passing the “Macron” Bill in August this year, online travel agencies in France will no longer be able to enforce rate parity on hotels. The practice has been cited as anti-competitive behavior and not in the consumer’s best interest.
Nor has the practice been in the best interest of hotels. For years, hotels have been bullied by powerful OTAs like Expedia and Booking.com into giving heavily discounted rates and access to inventory at steep commissions ranging from 12% to 30%. If hotels want premium positioning in OTA search results, they must pay even more.
Travelers love OTAs because they allow them to compare pricing in a destination, as do metasearch channels. OTAs have also opened up markets for hotels they might otherwise not be able to reach. But they have become too powerful and too aggressive.
OTAs have grown exponentially in recent years, reaping huge profits on the backs of hotels. In turn, they use this money to aggressively advertise in order to lure travelers to them, often bidding against hotel brand names. Expedia and Priceline, which owns Booking.com, are two of Google’s top AdWords clients.
Fair game in a free market, and in many respects hoteliers have only themselves to blame. But this has not been a free market. OTA contracts have imposed restrictions that limit hotels’ ability to manage their own rates and inventory. Read more »