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The French deputies take on price parity

42 deputies of the UMP party propose a law to improve control over practices of online reservation centers, particularly those regarding rate policies.

Last May 14, 42 deputies of the UMP (Union for a Popular Movement, the center-right party) introduced a bill to improve control over practices of online reservation centers. In this way it attacks the stranglehold of OTAs such as Expedia and Booking, particularly concerning rate policies.

"The development of new digital tools has upset commercialization practices in the hotel industry. In France, the hotel industry represents revenues of 17 billion euros (source: Ministry of tourism) for 17,000 hotels, or around 1 million euros per hotel. Around 50% of hotel reservations are made via Internet, and this figure grows constantly. 50% of these reservations are made via sites of booking centers," the deputies remark.

The bill thus also takes on the sector's players, such as Booking and Expedia: "The two groups alone channel almost all online reservations outside the hotel's site. The situation on the market is thus highly concentrated. These two unavoidable players (and their subsidiaries) impose contracts that are clearly inequitable to hoteliers, and some clauses could constitute anti-competitive practices. Hoteliers are offered no opportunity to negotiate these clauses."

The deputies are particularly insistent about the price parity clause requiring hoteliers to offer the same price through all their distribution channels, and are considering prohibiting it. They thus propose the "organization of a control over rate parity with a goal to or potentially leading to making distributor competition through pricing disappear."

It should be remembered that this clause, requested by hoteliers, prevents price variations on the different booking sites, generating confusion for clients. Suppression of the clause will work both ways, thereby allowing OTAs to freely dispose of its sales margin, by restituting part of it to its clientele if it so choses.

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