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