Hotels and guesthouses can now advertise any price and are no longer beholden to those on Booking.com, the biggest online travel group.
The local hospitality trade welcomed the decision by the Competition Commission, which came to an agreement with the booking platform. Previously local accommodation providers could not advertise prices different from those on Booking.com.
Booking.com fees range from 10% to 25% per booking, averaging 15%. It meant hotels could not offer cheaper deals on their own websites for fear of being struck from the powerful online portal.
The Federated Hospitality Association of South Africa (Fedhasa) says it is a win for fair competition and a major relief for hotels and guesthouses.
Fedhasa national chair Rosemary Anderson says the trade globally is experiencing the erosion of bottom-line profits — and platforms such as Booking.com have contributed to this. “Our occupancy in South Africa is nowhere near where it used to be. It’s only Cape Town and the Kruger [Park] areas that are experiencing good levels of occupancy. The new agreement between the Competition Commission and Booking.com to address price parity clauses will significantly assist in improving profit margins.”
She says online booking platforms have transformed the trade, but that all parties need to be protected. “It’s crucial to foster open dialogue between platforms and accommodation providers to develop balanced solutions that address the needs of all.”
Booking.com’s agreement supports historically disadvantaged SMEs in the tourism sector with initiatives to help them grow, Anderson says. “They say they will now help SMEs, especially those previously disadvantaged, with marketing and platforms. It’s really overdue.”
Fedhasa said in a statement that previous rules did not encourage competition and excluded SMEs. It said challenges remain, including VAT implications and the effect on cash flow. Many platforms hold guest payment until check-in, which can strain the financial operations of accommodation businesses, especially smaller ones. It said earlier access to these funds could help day-to-day operations and that solutions which balance the needs of the platforms, providers and guests remain crucial for growth and mutual benefit. The new agreement, it said, will level playing fields and offer more competitive rates through direct booking channels.
“Accommodation providers will now be able to offer fairer prices on their own advertising platforms, which will simultaneously improve profit margins and benefit tourists,” the statement said.
Marc Wachsberger, MD of The Capital Hotels & Apartments, says hotels were previously not allowed to add on extra for commissions, as restaurants do for platforms such as Uber Eats.
“The hotel has to be the same as the online price otherwise they would mark you down and you wouldn’t appear on Booking.com — that was determined to be legal,” he says. “I would think the reaction of the hotels is that it’s going to be much cheaper to book direct than on Booking.com.”
More Family Collection CEO Robert More says: “We have the pressure to sell our own rooms and [Booking.com] just want to sell a room; they do not carry risk in inventory, not selling whereas we need to be more versatile.”
More says the move to get rid of the pricing parity will not affect his business in a significant way. “We don’t sell under rack to protect the traditional channel where we get 80% of our business and importantly protect our own direct channel.”
He says the benefit will be for those who are trying to develop their direct strategy. “It is a win for the industry but these online companies are becoming smarter and smarter, with [huge] budgets to invest in technology, so they can easily brush off these setbacks.”
This is not the first time Booking.com has come under scrutiny for competition practices as regulators seek to clamp down on the group as part of efforts to control tech dominance.
Regulators around the world are looking into tech deals in an attempt to control the industry’s growing power, especially when it’s detrimental to local companies.
In February, Booking Holdings was given a “landmark fine” by Spanish regulators for anticompetitive practices, according to the Financial Times. The antitrust watchdog in that country drew up a provisional €486m penalty against Booking Holdings, the world’s biggest travel agency by market capitalisation.
Back on local turf, the Competition Commission released a report on the domestic e-commerce industry after a two-year investigation. It put forward remedial actions that platforms such as Takealot, Uber Eats, Google and Booking.com had to put in place to encourage competition from smaller digital operators.
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