BHA slams 'restrictive' OTA rate parity agreements

By Sophie Witts contact

- Last updated on GMT

Booking.com is introducing new rate parity commitments on 1 July
Booking.com is introducing new rate parity commitments on 1 July

Related tags: Hotel

The British Hospitality Association (BHA) has criticised ‘restrictive’ price fixing agreements set by online travel agents (OTA’s), and announced that it will continue to campaign to ban the terms.

The group's statement coincides with a commitment from prominent OTA Booking.com to roll out its new rate parity agreements in the UK and Europe on 1 July.

Under the commitment, hoteliers advertising rooms on the site will be able to offer lower prices and additional services through other OTA’s.

However, the hotels will be prevented from offering cheaper rates or better booking conditions through their own websites than those advertised on Booking.com.

Though Booking.com said the commitment was necessary for the site to remain ‘a cost-effective marketing channel for partners and deliver transparency, choice and great prices for consumers’, the BHA is arguing that such terms restrict freedom in the market.

“Hotels are handcuffed by rate parity clauses and restricted from offering the best deals to customers on their own hotel websites,” commented Jackie Grech, legal and policy director at the BHA.

“As an industry we work with OTAs as they provide an important service to enable hotels, especially smaller establishments and independents, to attract bookings that they potentially wouldn’t bring in on their own, but the fees [for using the service] are significant.”

Grech explained that operators could face paying up to 20 per cent of the whole room fee per night to the travel agents.

She said: “That’s why we believe that where hotels can attract direct bookings to their own websites, they shouldn’t be restricted from doing so.

“We all want the same thing: a competitive and innovative market for hospitality and tourism, narrow rate parity misses the mark in aiding that goal.”

French government ban

The BHA has also welcomed news this week that the French government plans to bring in legislation to ban rate parity clauses in contracts between hoteliers and Online Travel Agents (OTAs).

The trade association submitted a report to the French Competition Commission earlier this year calling for a ban on the agreements.

Plans are still in the early stages and will have to go through the French Senate in the coming weeks.

Grech said: “The BHA commends the French Assembly for taking this move and encourages the French Senate to follow suit when they vote on this matter in two weeks’ time.

"With Germany and France taking a clear stance on rate parity, we look to the EU and Competition and Markets Authority in the UK to harmonize the cross-border position and allow customers and businesses to benefit from a fair and competitive market for online hotel booking.”

Related topics: Business, Hotels

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