Spain 
Italy 
Greece 
Hotel Groups Against Booking.com’s Commissions
24 September 2017
The online platform does not permit hotels to lower their prices. The practice was banned in some countries and Portugal is considering doing the same
It’s called a parity clause, and hospitality companies throughout Europe hate it. Two years after the first complaints, hotel groups are once again challenging the Booking rule which prevents hotels from offering rooms on their websites at a rate lower than that offered on the reservation platform. Portuguese businessmen, not wanting to antagonise Booking, speak of a “distortion” to competition and want a prohibition of the clause to extend to the whole of Europe.
The rule is controversial and has already led to a joint complaint by ten European authorities to the EU’s Directorate-General for Competition in 2015. The Brussels report, published in April, did not provide any diagnosis, just maintaining Booking under observation. The decision did not go far enough for France, Italy, Sweden, Germany and Austria, who separately managed to end the rule in their countries.
The issue is likely to be at the centre of debate during October’s next meeting of Hotrec, the European organisation representing the hotel industry, which has been one of the most critical voices of Booking’s clause, according to the Spanish newspaper Cinco Días.
Cristina Siza Vieira, president of the Portuguese Hotel Industry Association (AHP), says that a change would be welcomed. “The AHP has not yet had contact with other associations regarding the matter, but if it is discussed at Hotrec, we will join any initiatives with the rest of Europe,” he stated to Dinheiro Vivo.
What is at stake is equality in attracting investment from the perspective of competition, because in the current model the market is distorted. “It is legitimate that the hotel industry would seek the same conditions in the European market and we are pleased that this is happening. It would be beneficial to the industry if Booking were to operate under the same conditions throughout the continent,” he argues.
Despite never having submitted a complaint to the Competition Authority in Portugal, the AHP has already addressed the issue with the current and previous government, because “associations are very small and own their own, cannot get anything done against Booking. The prohibitions have been carried out by robust interventions by the states themselves. ” This was what happened in France under the Macron law when the current French president was still Minister of Economy and adopted protectionist measures.
Data from Hotrec show that parity clauses have already been eliminated by 46% of the European market. The organisation’s CEO, Christian de Barrin, says “other member states will follow suit.” The next one should be Belgium, where the legislative process that would end the parity clause is already under consideration.
Cristina Siza Vieira points out, however, that the initiative is not a crusade against the reservations platform. Although she maintains that “it is essential that hotel companies are not hostage to Booking and that they find their distribution channels,” the president of AHP acknowledges that “cooperation with Booking is fundamental” because the platform’s market share in Portugal is around 80%. “Its presence is quite significant, and they have many accommodation options. If it were not for Booking, fewer would exist,” he acknowledges.
Hotel groups agree with that assessment. Gonçalo Rebelo de Almeida, chairman of the Vila Galé hotel group, confirms that in Portugal “no action has been taken” against the platform and that Booking is one of the group’s main business partners. “As with all partnerships, there are things we would like to negotiate better, but they are contractual details.
We do not see anything problematic, nor any abuse of a dominant position. The relationship is healthy,” says the executive. In the case of Vila Galé, Booking “is one of the main sales channels”, but its percentage of total bookings does not reach 10%.
Despite the good relationship that hotel companies claim to have with platforms like Booking, complaints have long been heard. In addition to the parity clause, hotels complain about commissions practised by intermediaries.
In an industry meeting that took place earlier this summer, Manuel Proença, CEO of Hoti Hotels, said that “one of the most significant factors in hotel revenues is the commissions charged by online platforms, which range from 20% to 25%.” He also stressed that “a significant part of tourism revenues have been taken outside of Portugal by these online platforms. This is a relatively recent phenomenon and is very difficult to combat. ”
At the same time, José Theotónio, CEO of the Pestana group, also complained that “the growth of costs with online intermediaries has been increasing exponentially and, in the end, these companies are appropriating in an important part of value generated by tourism.”
Original Story: Dinheiro Vivo – Ana Sanlez
Photo: Diana Quintela/Global Imagens
Translation: Richard Turner