Rate parity future and the new ban from France regulators

France the second country to ban rate parity after Germany has taken the decision that all hoteliers where waiting, to bring the rate parity to an end. But what will this imply in term of the application and what will this mean for hoteliers in term of the application or will this imply that it will move in to a pricing war?

The French national assembly adopted a new bill that will reshuffle the cards on how Booking.com and Expedia partner with hotels.
The bill called “Macron bill” – named after French Minister of the Economy Emmanuel Macron – prohibits OTAs from including any parity clauses at all in their agreements with hotels, and gives hoteliers the full pricing freedom – including offering lower rates on their own websites.

From a hotelier perspective this means that new agreements between OTAs and hotels will have to be formulated in a way that allow hotels to offer lower rates in any of their sales channels, including their own website. What’s more, the bill also prohibits OTAs to offer lower rates as those provided by the hotel, giving hotels full pricing control within their contracted distribution channels.
Carlo Olejniczak, director Booking.com for France, Spain and Portugal, told AFP (Google Translate version) that the new bill will result in intensified pricing wars between OTAs and hotels, as Booking.com remains committed to its “best price guarantee.”

Roland HEGUY, President of HOTREC’s French member association UMIH “It is a real revolution that is underway for the French hotel industry and for our customers. After the decision of the Competition Authority, this vote will contribute to the establishment of a renovated contractual framework to restore conditions of a commercial relationship based on trust between hotels and booking sites in the interest of consumer”.

Quoted in hospitalityInside.com (by subscription only), Booking.com’s Managing Director EMEA said that in a world without rate parity many independent hotels in France will not be able to compete with the major hotel brands and search engines, and this will have a negative effect for tourism to France as a whole.
The main problematic with rate parity will be the application as chain hotels will need to make a major change in their technologies and this will also affect their global contracts as this new policies don’t apply worldwide. For smaller independent hotels that don’t manage their distribution proactively this will mean not much as they will not be able to enforce this or control it as it requires a lot of work and knowhow to manage their channels.

Furthermore the new regulation may be effective for hotels whose source market is France but for hotel with source market coming from Asia and Americas and other European market this may mean not much of a change as OTA as already playing with rates in the source markets.

While OTA won’t have a contractual right to prevent hotels to give them better rates, it should still have strong commercial leverage to punish hotels that are giving better rates to other sites. This should drive greater price disparity across channels, which will encourage consumers to comparison-shop more than ever

Google Wallet and how will this affect us

Google is planning to launch its Google Wallet in at least one major European city during the first half of 2012,as mentioned by Osama Bedier, Google’s vice president of payments so hoteliers have time to see evolution of NFC technology be tested before it reached our doors.

Bedier, who spoke  at the NFC Payments Europe 2011 conference in London, contends the Google Wallet will be open, adding that the search giant has received a welcoming response among service providers and other prospective participants in Europe, even from mobile operators, he told NFC Times in an interview.

“We found that European partners were willing to move faster (than in the United States),” he said. “There is a better understanding of the whole space. The ecosystem is more collaborative than in the States.”

“I doubt that it would be acceptable for the operators in Europe,” Jörg Heuer, who leads the research and development team developing an NFC mobile-wallet program for Germany’s Deutsche Telekom Group, told NFC Times. “For my company, that would create a connection between two brands on a level that is just not what we would like to see.”

Bedier did not say which banks, processors, card networks or mobile operators in Europe that Google has been trying to recruit for its wallet. He said the talks began around the same time as those with U.S. companies.

The search giant plans to make money by charging merchants and other advertisers to deliver targeted offers, including coupons, to consumers, while not charging any fees to banks or other payment service providers it allows into its wallet.

“We started by pulling together a partnership with some of the biggest brands in the U.S.,” he said in response to a question during his presentation today. “And we intend to do that in almost every geography. And if it wasn’t clear from my presentation, our plans are to expand globally.”

This new way of payment method may be there for 2013 and hotel needs to start thinking about this as this could be part of the strategy in terms of sending marketing messages and as a tool that does everything payment marketing and even the key to open your room.

Read more about this on The New York Times