How can hotels fight booking platforms

Parliament opposes booking portals

Politicians want to help hoteliers to get a longer stab at booking platforms. But experts fundamentally doubt that this will be of any use

The National Council will have to decide next week on a “ban on gagging contracts on online booking platforms against the hotel industry”. This calls for a motion from CVP Council of States Pirmin Bischof.

The importance of this debate extends well beyond the hotel industry. In the future it is likely that parliamentarians will see a need to protect the local economy from the unpleasant effects of digitization.

The Council of States had clearly accepted the Bishop's motion in March. The Economic Commission of the National Council recommends that the Grand Chamber do the same as the Council of States.

In essence, it is about the following: The legislature should intervene in the contractual relationship between globally active booking platforms and hotels so that Booking, Expedia and Co. can no longer forbid hoteliers to offer overnight stays cheaper on their own websites.

According to a majority of the commission, these contractual conditions, known in the jargon as “narrow price parity clauses”, restrict hoteliers too much in their entrepreneurial freedom. She points out that Switzerland's neighboring countries have also banned this practice.

Will the freedom of contract be restricted?

A minority, on the other hand, does not want to hastily obstruct the opportunities of digitization with laws. She sees no need to restrict the freedom of contract in advance.

The platform providers fear that consumers without these contractual clauses could only get an overview on their (undisputedly well-made) pages - but then make use of a cheaper offer on the hotel website.

Perhaps analogous to a customer who has a television set explained to them in a specialist retailer, but then orders it elsewhere.

Booking, which belongs to the US group Priceline, is the dominant booking platform in Switzerland. However, hotel owners can offer their rooms with competitors such as Expedia or HRS at higher or lower prices. Or on the Swisshotels platform, which the industry operates itself together with SBB and Switzerland Tourism.

The competition commission gave the hoteliers the freedom to set different prices on different booking platforms. It prohibits the portals from having “broad price parity clauses”.

But the hotel industry is not satisfied: "The competition commission had hoped that a ban on the wide price parity clauses would result in platforms lowering their prices, new providers entering the market or existing players offering new services," says Christophe Hans, Head of Economic Policy at Hotelleriesuisse. But none of this happened. The competition doesn't play.

"Reflex against tech companies"

"With the dominance of the Booking.com platform, its commissions also rose: in 2002 they were 2%, in 2008 they rose to 8%," says Hans. Today, when Booking.com has achieved a market share of 73%, the commissions are even 13% on average. So much for the arguments.

But there is a third level: the question of whether the Swiss parliament can and should protect the local economy from the global effects of technological change. Or the price supervisor who announced this week that he could not agree on a price reduction with the hotel booking portal Booking and was therefore opening proceedings.

The FDP Council of States and IT entrepreneur Ruedi Noser has a firm opinion on this: "It is a completely absurd idea, which probably only stems from the fact that Hotelleriesuisse has to show its members their own right to exist."

He suspects that the motion falls on fertile ground in parliament because there is a reflex against American tech companies.

"What is preventing Priceline from simply excluding those hotels that offer lower rates on their own booking systems?"

Tourism professor Christian Laesser from the University of St.Gallen thinks it is hopeless to fight companies like Priceline. As a global platform provider, they benefit from network effects that cannot be countered. "The bigger you get, the better your customer service and the more you can invest in advertising."

Laesser asks rhetorically what will happen if the Bishop motion is accepted. «What is preventing Priceline from simply excluding those hotels that offer lower rates on their own booking systems? Or to charge them higher commissions than everyone else? " Would Switzerland then sue the group with a market value of $ 90 billion and jurisdiction in the USA?

Laesser advises hotels to fundamentally rethink their sales. “Extremely conceived: Either you offer the raw material, i.e. the pure hotel room, only via platforms and completely set your own booking systems. Or they offer additional services to the hotel room, which they then market themselves as package deals. " Laesser gives the example of biking tours, which can be advertised for very target groups.

Whether hotels can survive on the market has little to do with contractual clauses.