FRIDAY, 15 MARCH 2019
SUBJECT: Labor’s plans to give Australians hotels control over their businesses.
LEON BYNER: You've got in this country two large businesses - these are multinational companies - who control up to 85 per cent of online accommodation bookings in Australia. And do you know what they are able to do - I think the fact that they could even do it in the first place was outrageous - that they say to a hotel or motel, doesn't matter who it is, what size, ‘you will not in your advertising on your Facebook for your company, your business, yu will not undercut our prices’. Because the fact of the matter is. if you book through them you'll often get a better deal. Now you've got companies like Expedia and Booking.com that have got 85 per cent of this market. Now I've got Dick Smith on the line and Dick, before I get to you I want you to hear what a good policy is about to do. Okay, so you stay there and don't go away. I want to talk to the Shadow Assistant Treasurer Dr Andrew Leigh. Andrew, I'm very glad to have you on today because one of my passions has been that for too long corporations have been able to bully small businesses and because they've got such market power they can get away with it. Now in this space of hotel bookings, tell us what you're proposing if you win the election.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Leon, we're planning to go straight to the problem you've talked about - getting rid of those price parity clauses that prevent small local hotels offering the best deal on their own websites. These large multinational booking providers have a massive share of the market and they're taking a whopping slice of booking fees. So if you book a hotel, coming to see WOMADelaide or the Adelaide Fringe, you might pay a $100 for a room and see $30 of that go overseas. A 30 per cent booking fee is a massive hit to a small operator.
BYNER: See, a lot of people wouldn't have known that. They’d have no idea.
LEIGH: It’s extraordinary, isn’t it? And they can do it thanks to their market power. I mean, they trade under a whole host of names – Expedia, kayak, hotels.com, Wotif, Priceline, Booking.com, Trivago. But it's a bit like laundry detergent- they’re two big players. And this duopoly, as you said Leon, is controlling 85 per cent of the market.
BYNER: So tell us what practically you will do?
LEIGH: So by banning these price parity clauses, we allow smaller hotels to offer the best deals on their own websites. They can genuinely say to their customers ‘book direct and save’. And that ensures that more of the money stays here. The tax revenue is here, rather than being in an offshore location. It's great for these hotels which are currently losing almost a third of the total room rate to the folks who are doing the booking. You need more money staying here to reward the people who are changing the sheets, washing the towels, vacuuming the carpets, running the reception - that's worth more than 70 per cent of the total cost, I would have thought.
BYNER: Yeah, and by the way – Germany, Italy, France, Sweden, Belgium and Austria have all done this. I want you to stay on the line Andrew. I think this is a good policy. I'm not being partisan here, I'm just telling you and you would remember, that I think this is a great initiative because we've allowed small and medium businesses to be victims of bullies. Well Dick Smith, what do you think of that. Good morning.
DICK SMITH: Yes, it's very good. I think it's amazing that the ACCC allowed this agreement in the first place. I could never get to the bottom of that and if you remember they have stated they are going to change it. But if Labor has got a policy, well it will definitely happen if Labor gets in so that's good.
BYNER: Yeah. And tell me why you – I remember, you just so people understand how important an issue this is?
SMITH: Why it's so important is for the small country hotels. See, it probably works if you were to book a hotel in Las Vegas possibly there might be an advantage in going to one of these foreign booking sites. But let's say you decide to go to Marree, for example. There there's really only two places you can stay and you key in Marree accommodation into your iPhone or a computer, what it will come up with is all these foreign booking sites. You don't really realize it and in fact you can scan down and what I found out was that up to 30 per cent - the shadow minister is correct - up to 30 per cent of the money is going to the northern hemisphere. It is draining probably a billion dollars a year out of Australian country towns, small mum and dad businesses and that's just outrageous. It’s interesting - I did a video really attacking these sites and it's now had I think someone told me 5 million views because it's become popular even in Europe and in England and in New Zealand, America because these huge – they they are owned by two basically very wealthy billionaires and they must just be laughing at the fact that we could be so stupid that we would, people think if they book through the site they're getting it cheaper. Obviously if a commission is going to some billionaire in America, it must be more expensive. And so my suggestion is look at, keep going down the Google entries until you finally get to the motel site itself. Ring them up and they’ll give you a good deal and the money stays in Australia.
BYNER: Dick, thank you for raising this in the first place. So, Andrew Leigh, there’s a big tick on this one.
LEIGH: I think Dick put it very articulately there, Leon. It's a policy whose time has come, it's a policy that ensures that we back Aussie small businesses over offshore multinationals. That’s what we've been trying to do on a lot of our competition policies.
BYNER: So when you, if you go on one of these sites and you still book through them, all we’re saying is well you can do that but just know that if you did it direct you might save some money and the money will stay here?
LEIGH: Exactly. We wouldn't need it this, Leon, if they were charging the sort of commission that you pay on your credit card - a couple of per cent. But when their commissions are getting up to 30 per cent, that looks like a duopoly that's throwing its weight around a bit too much. So just as we've done ensuring that independent mechanics have the data they need to fix modern cars, with a franchising code for auto dealers and dairy farmers, we've seen a problem in a particular sector of the economy where small business is getting a raw deal and we've said a Shorten Labor Government will fix it.
BYNER: All right. Andrew Leigh, thank you.
Authorised by Noah Carroll ALP Canberra.