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"Voluntary" give me a break. Do you actually believe what you're typing? If so, that is an impressive spell you've placed yourself under. The large OTAs have su

"Voluntary" give me a break. Do you actually believe what you're typing? If so, that is an impressive spell you've placed yourself under. The large OTAs have such a large share of the market that there is nothing voluntary about using them. It's list your hotel with us or go out of business. And when you have that clout, you can then say, and don't try listing prices on your website that are lower than ours or we will de-list you. Explain how that is not price-fixing at worst, and not shady at best?

avar 7y ago
I didn't mean to ignore this, I just wasn't following the thread, and perhaps you won't see this reply. I'm not maintaining that the current status quo is optimal, just that it's more complex than what people traditionally think of as price fixing, which e.g. would be all the gas stations in your area deciding to charge you the same for gas via explicit collusion. Speaking more generally, the travel industry as a whole has always and probably always will spend a relatively large amount of advertising of some sort. Most of the industry is hoping to lure travelers with no local knowledge to their properties or services, and they're competing with other local properties. Before OTAs hotels might expect to pay this advertising fee to travel agencies, or to pay to be part of a hotel chain as a guaranteed source of customers. The unstated desire of people opposed to rate parity is to somehow have their cake and eat it too. After all, if almost nobody looked at these OTA websites why care about it? It's not going to have much of a financial impact. But they do care, because OTA's are a major source of revenue. And why is that? Because people get a lot of value from those sorts of market intermediaries, not just in the accommodation business, but in the form of major chain stores, Amazon, eBay etc. It's easier to compare products when you have a standardized comparison run by an intermediary. As far as I can tell the scenario hotels hoping for the end of rate parity want is one where consumers might browse OTA websites, but be savvy enough to just visit the hotel's website directly to make a booking. I don't see how that's going to be sustainable, you'd essentially have advertising with a free rider problem. Ending it wouldn't be the end of the world, but I don't see how we wouldn't just end up in some new equilibrium where accommodations wouldn't just pay a similar amount of money for advertising via some other means. It's not like browsing organic Google results for hotels is some arcane wizardry, or visiting a town's listing of hotels (which the hotels generally don't pay for or get at really good rates) isn't known to people.
- systematical 7y ago
  Yes these lingering discussions tend to get buried. I'm actually surprised you responded given the nature of HN. I'm surprised I decided to check my comment history as well. We disagree. I view rate parity as a form of price-fixing. I don't doubt the value OTAs provide to the consumer, but their value isn't sufficient enough to stand on its own without price fixing. Expedia knows this, and therefor uses its market position to fix prices and thus maintain is position. When challenged, which it has been numerous times, its legal team has been effective in arguing their point. I can't deny that. Perhaps my view is overly simplistic. I view someone telling me, if you want to sell your product on my site you have to sell it for the same price everywhere as price-fixing. Yes, its voluntary, but in practical terms its not because the hotel cannot survive without the OTAs. I won't weep too many tears, because the hotels could use their sufficient capital to address the problem. But, lets at least call a spade a spade here. If it looks, walks, and quacks. Well... You brought up Amazon as an example of market indermediaries, otherwise known as middlemen. Are they engaging in price-fixing? What about ebay, are they engaging in price fixing? I'm actually interested if we can find a similar example to what OTAs do in another industry. I don't think we can.

avar 7y ago

I didn't mean to ignore this, I just wasn't following the thread, and perhaps you won't see this reply. I'm not maintaining that the current status quo is optimal, just that it's more complex than what people traditionally think of as price fixing, which e.g. would be all the gas stations in your area deciding to charge you the same for gas via explicit collusion. Speaking more generally, the travel industry as a whole has always and probably always will spend a relatively large amount of advertising of some sort. Most of the industry is hoping to lure travelers with no local knowledge to their properties or services, and they're competing with other local properties. Before OTAs hotels might expect to pay this advertising fee to travel agencies, or to pay to be part of a hotel chain as a guaranteed source of customers. The unstated desire of people opposed to rate parity is to somehow have their cake and eat it too. After all, if almost nobody looked at these OTA websites why care about it? It's not going to have much of a financial impact. But they do care, because OTA's are a major source of revenue. And why is that? Because people get a lot of value from those sorts of market intermediaries, not just in the accommodation business, but in the form of major chain stores, Amazon, eBay etc. It's easier to compare products when you have a standardized comparison run by an intermediary. As far as I can tell the scenario hotels hoping for the end of rate parity want is one where consumers might browse OTA websites, but be savvy enough to just visit the hotel's website directly to make a booking. I don't see how that's going to be sustainable, you'd essentially have advertising with a free rider problem. Ending it wouldn't be the end of the world, but I don't see how we wouldn't just end up in some new equilibrium where accommodations wouldn't just pay a similar amount of money for advertising via some other means. It's not like browsing organic Google results for hotels is some arcane wizardry, or visiting a town's listing of hotels (which the hotels generally don't pay for or get at really good rates) isn't known to people.

systematical 7y ago
Yes these lingering discussions tend to get buried. I'm actually surprised you responded given the nature of HN. I'm surprised I decided to check my comment history as well. We disagree. I view rate parity as a form of price-fixing. I don't doubt the value OTAs provide to the consumer, but their value isn't sufficient enough to stand on its own without price fixing. Expedia knows this, and therefor uses its market position to fix prices and thus maintain is position. When challenged, which it has been numerous times, its legal team has been effective in arguing their point. I can't deny that. Perhaps my view is overly simplistic. I view someone telling me, if you want to sell your product on my site you have to sell it for the same price everywhere as price-fixing. Yes, its voluntary, but in practical terms its not because the hotel cannot survive without the OTAs. I won't weep too many tears, because the hotels could use their sufficient capital to address the problem. But, lets at least call a spade a spade here. If it looks, walks, and quacks. Well... You brought up Amazon as an example of market indermediaries, otherwise known as middlemen. Are they engaging in price-fixing? What about ebay, are they engaging in price fixing? I'm actually interested if we can find a similar example to what OTAs do in another industry. I don't think we can.