Hoteliers limit online agent commission to 15 percent

Hoteliers limit online agent commission to 15 percent

February 10, 2019

Mysuru: In continuance to hoteliers protest in Ahmedabad, more than 400 hoteliers in Mysuru have decided to regulate their terms of operation with Online Travel Agencies (OTAs) and aggregators, putting an end to what they have termed ‘exorbitant commissioning’ and ‘deep discounting’ tactics.

At a meeting held in city yesterday, President of Hotel Owners Association, Mysuru C. Narayana Gowda said that there was a need create a regulatory framework to protect the hospitality industry from predatory policies of OTAs and aggregators like the retail industry is now protected from e-tailers.”

“These online channels entered the market under the guise of helping hotels in effectively increasing occupancy rate and revenues. But in effect, in their zeal to garner market share with seemingly unlimited funds, they have ruined the pricing and profitability balance by offering indiscriminate discounts to the customers and largely offsetting those discounts by levying high commissions,” he said.

“Hijacking the property online and offline brand, hiding of actual customer rates, pitting one hotel against the other for their benefit are some of the unfair strategies adopted that has collectively impaired the industry. These practices have inordinately increased the occupancy at a drastically reduced average price, resulting in high operating expenses. Such economics have a negative impact on the business profitability and the hotel industry is now strangled for their basic existence,” he added.

The major terms decided by the Association for member hoteliers are: TAC (Travel Agent Commission) should be restricted to 15% for Pay At Hotel (PAH) bookings and 18% for prepaid bookings. Any other means of increasing commission via schemes like PLB (Performance-Linked Bonus), visibility boost, etc should be discontinued; Discounting, if any, shall be offered only by hoteliers and not OTAs.

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Narayana Gowda said that all 400 hoteliers in Mysuru have decided that they will block the inventory to those OTAs who do not adhere to the terms put forth by the Association after Feb.15.

Ravi Shastri, Vice-President of Karnataka Pradesh Hotel and Restaurant Association, said, “There is a need for a level-playing field for the ecosystem partners to work in harmony for sustenance of long-term partnership.” Bhaskar, secretary of Coorg Hotel Association, said, “The authorities concerned should intervene to get the payments cleared from aggregators, which amounts to a few crores of rupees.”

Sooryah Prakasam Pokkali, President of Association of Hotels and Services Apartments, Bengaluru, thanked the support received from online partners for supporting the cause.


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