FAQ on New Rules for European Hotel Rates: How Booking Sites Could Feel Pain
Skift Take
Over the long term, the new limited rate-parity rules in Europe could help hotels generate more bookings from their own direct channels, including over the phone. However, don't write off the online travel agencies just yet. They still hold a lot of the cards.
Are the scales about to tip toward hotels in their frenemy relationships with online travel agencies in Europe?
Under pressure from the hotel industry and competition authorities in several European countries, Booking.com and Expedia have settled with regulators in Sweden, Italy, and France and have agreed to change their contract provisions with hotels pertaining to rates, availability and room types across Europe starting July 1 and August 1, respectively.
These new so-called limited rate-parity agreements, which run five years, mean in theory that hoteliers will be able to give Expedia a 286 euro ($259) rate for a room with a double bed in Paris and then turn around and give Booking.com or another booking site a 275 euro rate ($249) for the same room. They can also vary availability and room types offered among different online travel agencies.
Another way that hotels will be able to put a distance between themselves and the rate parity provisions that have been in vogue for years is that they will be able to offer the general public lower rates over the phone than they give to their online travel agency partners. Imagine hotels' TV advertising offering travelers the best rates if they phone the hotel.
The whole idea behind the new rules in Europe is to give consumers more choice and spur competition, including pressuring online travel agencies to reduce the commissions they demand and offer better terms and conditions, including marketing provisions, in order to woo hotel partners.
One possible impact is that the balance of power between online travel agencies and hotels may shift somewhat toward hotels as their own booking channels pick up market share.
How will the new agreements work and what will be the impact?
FAQ on Rate-Parity Reforms
What are the rules for the new online travel agency-hotel relationships?
Booking.com and Expedia will no longer be able to have clauses in their contracts that prohibit hotels from offering lowering room rates to other online travel agencies. These contract
