Labor pledges to ditch rate parity legislation in a boost for hotel operators

The Federal Opposition has pledged to scrap rate parity legislation for the accommodation sector.

Opposition competition minister Andrew Leigh has committed to legislating against the rate parity clauses contractually imposed on accommodation businesses when they market through the two online travel agencies Expedia or Booking.com-related sites.

Under current laws, the clauses prohibit operators from advertising prices on their own websites which are lower than those of the two OTAs, who account for 84 per cent of online bookings for Australian properties.

Operators are charged between 15 to 25 per cent for each booking made through an OTA.

“Increasing competition helps drive costs down for consumers by correcting the power imbalance between small business and the big end of town,” he said. “It’s good for Australian consumers and it’s good for Australia’s economy.

“Our local hotels want to be as hospitable as possible, but they’re paying a huge chunk of their revenue to the booking platforms, and losing their direct contact with guests.”

Under current Australian Competition and Consumer Commission (ACCC) rules, properties are only able to offer lower rates than those advertised by the OTAs for direct bookings over the phone, in person or through loyalty programs.

However, the ACCC is in the final stages of its long-running investigation into OTA practices and may soon announce its own intentions to act on rate parity.