Chris Jack

AAA Reports Damaging Impact of Online Travel Agencies

Chris Jack

The AAA (Accommodation Association of Australia) has just announced the results a member survey from 400 responses, which reveals some very clear findings, some of which will probably not be a surprise to most hotel operators.

The biggest concern for the AAA members who participated in the survey is the erosion of profits caused by (it seems) high online travel agency commissions and the effect this has on overall financial results.

The AAA does not mince its words when it refers to Booking.com and Expedia directly as being the main culprits (after all — they have gobbled up most of their competitors and now represent an effective OTA duopoly).

Personally, I am less "anti OTA" than many hotel operators because I see so many hotels (both small and large) with such shocking branding online presence, that I actually believe Booking.com helps with their bottom line in those cases.

It also gives hotels an opportunity to provide a fantastic guest experience, and to educate guests to book directly on their next visit.

The biggest gripe I have with the big two is their commission rates which are completely disproportionate to their actual costs. If only they would stop their television advertising wars to gain market share, they might be able to reduce their commission rates!

I know things have gotten out of control in that department because my three year old daughters favourite phrase at the moment is "Hotel. Trivago". If it's not Trivago advertising everywhere that freaky owl courtesy of Tripadvisor and the creative agency who was obviously having a bad trip when they came up with that...

Secondly, it appears that there are justifiable frustrations about the lack of regulation of Airbnb properties and concerns about public holidays and penalty rates on weekends.

Of course only those on the deluded side of politics will tell you that penalty rates will not lead to reduced employment and that “there is no evidence of this”. And yet, I know for a fact that many independent hotels and motels will enforce a minimum stay period over long weekends to reduce the onerous costs of penalty rates.

As always (as any economist will tell you) there are always repercussions for government interference of any kind, and in this case it is the hotel workers who are not rostered on, and the guests who need to book a two day stay minimum because you can't afford to change the bed-sheets everyday.

In terms of lax Airbnb regulation, this too is another kick in the pants for small, hard working hotel operators. There has been plenty of time to enact laws and regulations to bring Airbnb properties up to the standard and expectations of commercial lodging businesses.

And yet, all we hear from governments are excuses about enforcement, in a digital age where everything is tracked and leaves a digital trail? That is simply not good enough.

It doesn't seem like there will be much change at all in the area of Airbnb regulation, or perhaps there will be once someone dies or or is seriously injured due to inadequate safety measures...

Read the entire press release here.