In an effort to develop more content and campaigns to increase international travel to Australia, Expedia group and Tourism Australia reached a three-year multimillion dollar Memorandum of Understanding (MoU) earlier this year.
This first year of the partnership will focus on major campaign activity in two of Australia’s highest volume and highest-spending markets, the U.S. and the UK. Over the course of the three-year deal, marketing activities will be extended to additional regions of the world.
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In addition, the agreement will also include shared reporting on consumer insights and data analytics as it attempts to extend past marketing.
The formal agreement is the first Tourism Australia has entered into with a global online travel agency, as managing director John O’Sullivan acknowledged it was a strategic move to focus on partnerships to increase travel bookings and end yield.
“Expedia is one of the world’s leading travel companies with 20 years of experience of generating travel sales,” said O’Sullivan. “Our research shows our target customers are increasingly turning to online travel agencies when it comes to booking travel which makes Expedia an ideal conversion partner.
“Partnerships are critical to Tourism Australia in terms of us increasing our customer reach, providing cut-through for our destination messaging and ultimately making it easier for consumers to plan, book and buy quality Australian tourism products."
Between Expedia and its rival Priceline, the two control about 80 per cent of the market for online hotel bookings in Australia. However, hotels are urging the competition regulator to consult with Australian hotel operators about the unfairness of price parity clauses established by online travel agents.
The three per cent increase in commission rates for major online travel planners (from 12 per cent up to 15 per cent) follows Expedia’s buyout of Brisbane-based Wotif last year for over $700 million. In several other countries, Expedia and Priceline charge as much as 20 per cent commission.
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However, the rates in the Aussie market were lower when Wotif was a major factor. But since Wotif was taken over, online booking has turned into a duopoly similar to Coles and Woolworths in the supermarket sector.
Due to price parity clauses, hotels are unable to offer direct bookings for a room for less on its website than it can through the online travel agents. In addition, hotels must also ensure even its last free room must be made available on the online travel sites.
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Direct bookings would be prosperous for hotels, as they would be able to offer discounts of 10 per cent, but wouldn’t need to pay the 15 per cent commission to online travel agents.
While large hotel chains such as Hilton and AccorHotels are able to get around a portion of the parity clauses by offering special benefits such as breakfast, late checkouts or free Wi-Fi, smaller hotels have fewer options due to not having much negotiation power with the online travel agents.