Nordic Choice: OTAs are “greatest threat ever to hit industry”
Expedia has removed all 220 hotels belonging to the leading Scandinavian chains Scandic and First Hotels. First is seeking millions in damages from Hotels.com. And Petter Stordalen, who owns Nordic Choice Hotels, is defiant in the face of OTAs.
Major online agents, especially in the hotel industry, have in recent years ascended to an ever stronger position in the distribution of hotel rooms. This means that today up to 30% commission is required to sell a room through their channels. Now the Norwegian Competition Authority is entering the case. Stordalen says that “these giants represent the greatest threat ever to hit the hotel industry.”
As for the chains, Choice Hotels has spent $100 million on its own website and loyalty programs, which guarantee the guest the best price without costly intermediaries such as booking pages. But online companies require the sale of hotel rooms for the same price as the hotels’ own websites – so-called “price parity” – which means that the customer will encounter the same price regardless of where the customer buys. So everyone offers a “lowest price guarantee” because the price is simply the same everywhere.
Actions are taking place in the courts in the UK and the US against Expedia and Booking.com, where the online companies risk being sentenced to pay giant fines of up to 10% of revenue worldwide. In the UK, Expedia is trying to squeeze smaller online companies out of the market by requiring that hotels must provide the lowest price to Expedia. Also First Hotels has brought proceedings in the UK because Hotels.com is reporting the chain as all sold out.
Hotels.com had the industry by the scruff of the neck in Denmark too. Here, the site has appointed Billund, Denmark’s most expensive hotel city, with an average price of 930 DKK (€125). This is a highly misleading analysis.
[pictured: First Hotels Grims Grenka, Oslo]