HOTREC Calls for Parity Clauses from Hotel Distribution Contracts to be Banned

HOTREC, the organization representing the hotel sector in Europe, said it opposes to any commitment by Online Travel Agents trying to maintain parity clauses in hotel room distribution in one form or the other. Complete entrepreneurial freedom of hoteliers shall be restored allowing them to set their prices for any kind of distribution channel according to their business purposes, an announcement by the organization read.

The European Commission recently announced the launch of market tests in the antitrust investigations by the French, Swedish and Italian competition authorities in the online hotel booking sector, as Booking.com has offered commitments in order to end investigations.

“There are three major sites realizing 90 percent of hotel bookings via Online Travel Agents (the biggest one by far being Booking.com), compared to around 200.000, mainly small hotel enterprises in Europe,” said Christian de Barrin, CEO of HOTREC.

“From this proportion the bargaining power in the market is not difficult to be judged, therefore the protection for the small ones is crucial.”

Mr. Barrin added that authorities should be careful in assessing who regulates the market and sets the rules at the end.

According to HOTREC, under the current parity conditions applied on the market, hoteliers’ hands are bound and their entrepreneurial freedom is undermined, as they are not able to decide themselves which room prices and conditions to offer on the different distribution channels. The organization said that this is restricting competition and, as a result, customers would be denied from the possibility of enjoying the full benefits of competition.

“HOTREC calls upon competition authorities in Europe to ban all types of parity clauses from hotel distribution contracts, in order to allow hoteliers to decide themselves, and not the retailers, on how and for which price their hotel rooms are sold on the different distribution channels,” said Markus Luthe, Chair of HOTREC’s Distribution Task Force.

“It has to be taken care of, that the European Digital Agenda and competition rules are not benefiting in an imbalanced way the oligopolistic structure of hotel distribution portals, but are taking into account SMEs, forming the backbone of the European economy, and their entrepreneurial freedom,” HOTREC’s announcement concluded.