Accommodation providers have been backed into a corner by a Commerce Commission decision that means they cannot advertise their best prices on their own websites.
The commission announced late last month it had reached an agreement with online travel agencies Booking.com and Expedia.com, having investigated whether parity clauses in the websites' contracts with accommodation providers in New Zealand were ''anti-competitive''.
Following the agreement, the agencies had amended their contracts in line with what had happened in Australia, meaning accommodation providers could offer lower rates or tailor special deals for ''walk-ins, telephone bookings or loyalty members that are separate to the prices they advertise online''.
However, they could not offer rooms on their own websites at prices below those offered through either Expedia.com or Booking.com.
Villa del Lago owner Nik Kiddle said almost 30 ''deeply concerned'' accommodation providers in Queenstown met a representative from Booking.com to discuss the issues yesterday.
Walk-ins and telephone bookings accounted for only about 2% of the total business, and the two online travel companies took 80% of all bookings through their respective websites.
Loyalty programmes were a potential solution for larger companies but in the case of small to medium-sized businesses, many travellers would stay with them only once and any loyalty discount would be hidden behind firewalls and therefore not found on search engines.
While Mr Kiddle said he understood the value brought to the business by the two websites, their affiliates and subsidiaries, he questioned why they were ''so afraid of competing in ... the 20% that's left of the market?''
''Why can't these multinationals cope with that?''
Providers were told yesterday they would not, at this stage, face legal action if they advertised lower prices on their websites. They would, however, no longer have their listings optimised by Booking.com, meaning those operators would find their properties buried in search results.
Mr Kiddle said the providers' contracts with the agencies were ''open-ended'' and while a mass boycott of them had been discussed, it would ''cut our nose off to spite our face''.
''We would disappear from 60% of the global effort in marketing New Zealand tourism, which is a big loss for us and for the tourist business in this country generally.''
A request for individually tailored contracts to enable those providers who wanted to offer their best rates online to do so was made yesterday, ''but they said 'no','' Mr Kiddle said.
''Basically, we have to do it their way, or we're going to find ourselves dropping out of the online trade that we're able to conduct.''
There were also fears the companies would increase their commissions from 15% to 25%, which had happened in other jurisdictions.
''That will happen here. They're taking 15% of 80% of the accommodation business in New Zealand.
''If they increase their market dominance through this kind of collusion on price-fixing - which is what they're doing, which I consider to be totally anti-competitive and it entrenches the power of this duopoly which is now operating as a cartel - if they're able to do this and squash us out of that last remaining 20% then ... they're not going to stop at a 15% commission margin, they're going to go up to 25%.
''Everybody's bracing themselves for that.''
Mr Kiddle said the group was lobbying to have the decision reviewed and doing its best to bring publicity to the issue so people understood ''they're not getting the most competitive price'' by booking online.
''In fact, there are much better deals that are available, but we're not allowed to advertise, so we want the public to know that.
''Ring us, email us or somehow send some smoke signals, but we're not allowed to put it on the internet.''
The Otago Daily Times asked Commerce Minister Paul Goldsmith if he had asked for a briefing on the decision or if any other action was planned.
Mr Goldsmith said if parties had concerns, they should contact the commission directly.
''The Commerce Commission is an independent regulator,'' he said. ''It would not be helpful to the process if I, as minister, commented on the outcome of each investigation.''
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Comments
Just another example of large multinationals who espouse competition but can't handle any.
Just an aside, but how much corporate tax do either Bookings or Expedia pay in New Zealand. Yes that's right, NONE. So why is this government aiding these corporate leeches?