Expedia looks to strengthen grip on Aussie tourism industry

By Uwear

In an effort to develop more content and campaigns to increase international travel to Australia, Expedia group and Tourism Australia reached a three-year multimillion dollar Memorandum of Understanding (MoU) earlier this year.

This first year of the partnership will focus on major campaign activity in two of Australia’s highest volume and highest-spending markets, the U.S. and the UK. Over the course of the three-year deal, marketing activities will be extended to additional regions of the world.

RELATED TOPIC: Uber, Hilton collaborate to enhance travel experience

In addition, the agreement will also include shared reporting on consumer insights and data analytics as it attempts to extend past marketing.

The formal agreement is the first Tourism Australia has entered into with a global online travel agency, as managing director John O’Sullivan acknowledged it was a strategic move to focus on partnerships to increase travel bookings and end yield.

“Expedia is one of the world’s leading travel companies with 20 years of experience of generating travel sales,” said O’Sullivan. “Our research shows our target customers are increasingly turning to online travel agencies when it comes to booking travel which makes Expedia an ideal conversion partner.

RELATED TOPIC: Australia attempts to increase Japanese tourism with the GIGA Selfie

“Partnerships are critical to Tourism Australia in terms of us increasing our customer reach, providing cut-through for our destination messaging and ultimately making it easier for consumers to plan, book and buy quality Australian tourism products."

Between Expedia and its rival Priceline, the two control about 80 per cent of the market for online hotel bookings in Australia. However, hotels are urging the competition regulator to consult with Australian hotel operators about the unfairness of price parity clauses established by online travel agents.

The three per cent increase in commission rates for major online travel planners (from 12 per cent up to 15 per cent) follows Expedia’s buyout of Brisbane-based Wotif last year for over $700 million.  In several other countries, Expedia and Priceline charge as much as 20 per cent commission.

RELATED TOPIC: Top 10 destinations for Aussie business travelers

However, the rates in the Aussie market were lower when Wotif was a major factor. But since Wotif was taken over, online booking has turned into a duopoly similar to Coles and Woolworths in the supermarket sector.

Due to price parity clauses, hotels are unable to offer direct bookings for a room for less on its website than it can through the online travel agents. In addition, hotels must also ensure even its last free room must be made available on the online travel sites.

RELATED TOPIC: Australia’s Top 10 Luxury Hotels

Direct bookings would be prosperous for hotels, as they would be able to offer discounts of 10 per cent, but wouldn’t need to pay the 15 per cent commission to online travel agents.

While large hotel chains such as Hilton and AccorHotels are able to get around a portion of the parity clauses by offering special benefits such as breakfast, late checkouts or free Wi-Fi, smaller hotels have fewer options due to not having much negotiation power with the online travel agents.

Let's connect!  

Check out the latest edition of Business Review Australia!


Featured Articles

People Moves: Pine Labs, Deutsche Bank, McKinsey, Fortinet

Pine Labs names former Amazon exec as chief people officer, Fortinet hires government affairs leader for APAC, McKinsey India poaches Accenture HR exec

Dialight envisions a world of industrial safety with LEDs

Reliance on inefficient lighting technologies are not only harmful to the environment, but also increase injury risk and cost

Top 10: Must-see speakers at TECH LIVE LONDON 2022 event

Technology leaders from IBM, Oracle, Vodafone, JP Morgan, Accenture and the US Space Force are among the 80-plus speakers at upcoming TECH LIVE LONDON

Vodafone Business cyber leader Kawalec speaks at Cyber LIVE

Leadership & Strategy

Twitter timeline – how Musk pulled off a hostile takeover

Leadership & Strategy

Top 10 Asia restaurants, from Tokyo’s Den to Bangkok’s Sorn

Leadership & Strategy