News Source: www.afr.com
Travellers who book hotels online spend more, Expedia says
News Source/Courtesy: www.afr.com

Courtesy: Larry Schlesinger | News Source: afr.com

Booking giant Expedia says the fees it charges hotels that get bookings through its platform are "incredibly fair" and more reasonable than those the large hotel chains charge their franchisees.

Expedia, which includes Hotels.com, Wotif and Trivago among its brands, released research this week that the company says reveals the value it adds to the local tourism industry and to hotel operators.

The US$20 billion valued NASDAQ company is battling local hotel associations that have accused it and other online travel agents (OTAs) of "extortion".

The research by consultancy BVA BDRC found travellers who book an Australian trip via an OTA spend $375 - or 19 per cent  - more on their accommodation than those who book directly through a hotel website.

OTA users also spend $275 - or 17 per cent - more on activities and meals, with international travellers undertaking more than six activities on average while in Australia. Visitors who booked directly undertook an average of four activities.

The findings, based on a survey of 437 international travellers and 725
domestic travellers, found that OTAs support one in four Australian tourism jobs and contribute $1 out of every $4 spent locally by international visitors.

Speaking exclusively to The Australian Financial Review,  Abhijit Pal, Expedia's global head of research, dismissed the negative attitude the local hotel industry has towards OTAs as "posturing".

"Its better for them if they band together and create noise to potentially position themselves to negotiate on fees," he said.

Mr Pal said the fees Expedia charges  - between 10 and 15 per cent per booking  - were "incredibly fair", especially when considering all the services they provided such as the ability to book from anywhere. (It is understood most hotels pay 15 per cent).

"Chains are not cheap. They charge their franchisees anything from 15 to 30 per cent, higher than what OTAs charge," Mr Pal said.

He noted Expedia took no fees for listings, meaning consumers could do all their research via OTAs - the survey found 7 out of 10 did so - but still book direct, with no benefit to Expedia.

Mr Pal said some of the hotel industry reaction was because the sector felt it was losing control of their customers and was using OTAs as scapegoats for failed business models.

"The large global chains with dozens of brands are acquiring hotels left and right. But what is important to realise is they don't own any of the assets.

"All the risk is being taken by the owners, who put up the capital.

"What chains do offer is distribution to their franchisees. Their primary value is the business they provide direct.

"So when an owner gets billed twice - by the chain and then the OTA - their business model is being debunked. Owners don't want to be charged twice for the same booking."

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