Three major OTAs, namely, Booking.com, Expedia.com, and Trip.com, have agreed to remove parity clauses in their contracts with accommodation providers that hinder market competition and deprive consumers of choice, following a probe by Hong Kong’s competition watchdog.
The Competition Commission (CC) said in a statement that these clauses require accommodation providers in Hong Kong to always give the OTAs the same or better terms than those they offer in all other sales channels, with regards to clauses on room prices, conditions and/or availability.
The CC also said that in turn, this may have the potential effect of reducing the incentive of OTAs to offer lower commission rates in the first place. As a consequence, buyers of accommodation services, such as hotel guests, may not benefit from lower and more varied room rates.
It added that these clauses may potentially soften competition among OTAs, as well as hinder entry and expansion by new or smaller OTAs, depriving consumers of the benefits of effective competition.
In response to the CC’s investigation, the three travel conglomerates have proposed to remove those clauses of concerns in their existing and future contracts with accommodation providers.
Although the watchdog deems the proposed commitments as “appropriate to address its concerns and it, therefore, proposes to accept them”, on Tuesday, it launched a public consultation on the proposed commitments.
The commission said that it will consider all representations received by the deadline, which will be posted on its website, before making its decision on whether to accept the proposed commitments.