Will post-rate-parity world look better? Maybe not
Price parity, which allows OTAs to have access to prices as low as those available on hotels' own channels and ensures OTAs can remain competitive, is set to end. In its place is a licence for hotels to increase prices, which is being fast-tracked through the French legislature.
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"There will be no price competition if hotels determine all prices. Hotels will unfairly favour their own channels for the lowest pricing and availability, which will substantially reduce competition and consumer choice. It will lead to higher prices as there are no incentives for hotels to discount if they can eliminate all competition across distribution channels," said Christoph Klenner, Secretary General of the European Technology and Travel Services Association (ETTSA), adding:
"Control over pricing and the ability to restrict supply will undoubtedly lead to anti-competitive behaviour."
The "loi Macron" is set to cause chaos and legal uncertainty during the peak holiday season in August, when every hotel contract with an online reservation platform, including those without price parity provisions, will effectively be cancelled in the middle of summer immediately after entry into force.
The wholesale abrogation of valid and negotiated existing contracts is a dangerous precedent. The loi Macron is a signal to other industries that the French government does not respect the right of business and citizens to trust business arrangements that all parties have agreed to.
Online travel agents created a revolution in opening global markets to hotels without them having to make any investment in innovation or capability. Hotels are now seeking to free-ride on OTA investments and legislate their pricing under the pretence that this will increase competition. It will lead to less investment in innovation by OTAs, and therefore less visibility for independent hotels in particular.