Small hotels would be able to advertise online cheap room rates without fear of being punished by web behemoths under a plan Labor says will reduce the financial squeeze facing the tourism sector.
In a move backed by the accommodation sector, Labor on Tuesday will pledge to enable hotels to show online the prices for their rooms even if they are lower than those produced on Expedia or Booking.com websites.
Under current laws, contract terms known as "price parity clauses" set prices between hotels and the two major booking companies. The clauses prohibit hotels from advertising on their own website prices lower than those on Expedia or Booking.com-related sites such as Trivago or Priceline.com.
If they are found to have advertised cheaper rates, they can have their presence on the major websites "darkened" whereby their offerings are pushed to the final page shown to prospective customers. The commissions paid by the hotel to the two major companies, already between 15 and 20 per cent, can also be pushed even higher.
Hotels could only offer cheaper rates to people who call, are members of a loyalty program or turn up at the premise in person.
The issue is being examined by the Parliament at the moment, with industry surveys showing price parity clauses the number one complaint from hotel operators.
Opposition competition spokesman Andrew Leigh said Labor would follow the lead of nations such as Germany and Belgium where price parity clauses have been banned.
Ending private parity clauses will help small hotels and deliver cost savings to consumers, says Labor competition spokesman Andrew Leigh
He said Labor would also direct the Australian Competition and Consumer Commission to investigate the use of such clauses in other industries and across other platforms.
"Increasing competition helps drive costs down for consumers by correcting the power imbalance between small business and the big end of town. It’s good for Australian consumers and it’s good for Australia’s economy," he said.
"Our local hotels want to be as hospitable as possible, but they’re paying a huge chunk of their revenue to the booking platforms, and losing their direct contact with guests."
Between them, Expedia and Booking.com companies account for 84 per cent of revenue in the sector.
Chief executive of the Accommodation Association of Australia, Richard Munro, said Labor's plan would be a historic development for the sector.
"Effectively this means that our industry, should the Labor Party win office, will be able to finally offer the best rate directly to our customers without fear of being darkened or threatened by these big multinational online travel agencies," he said.
"This announcement is very welcome for our members and the industry across Australia, the winners will be the operators of small business and the public who can finally get a better deal by going direct online once this legislation is passed."