GARY ADSHEAD:
All right. Now, we all definitely do this, don't we - it's become the norm, and you know, to a degree, to the chagrin of the humble travel agent, that we just sit at home in our home office, or in our bedroom, or in the lounge room with a laptop, and we just go, "Oh, I want to go here on holiday, so let's start scanning some of those online booking sites to get a really good deal, a cheap deal." Well, is it the case? Andrew Leigh is the Assistant Minister for Competitions, Charity and Treasury and he's having a good look at this. I want to know why. G'day, Andrew.
DR ANDREW LEIGH:
G'day, Gary. Great to be with you and your listeners.
ADSHEAD:
Thanks, mate. Now, one of them is obviously Booking.com, for example, you know, Expedia, of course, which has sort of morphed into other companies as well. But what is the problem? What are you worried about?
LEIGH:
I'm concerned about a situation in which Australian hotels are getting too little of the share of the hotel bill. Now, these booking platforms aren't changing the sheets, they're not cleaning the toilets, they're not operating the front desk, and yet they could be charging fees that are in the double digit range, much more than your credit card would charge for processing the payment.
Many of them have sort of a monopoly position over the market, so I'm concerned that they might be using that monopoly position to get a pretty large share of the pie. And I'm also concerned that they might be telling hotels, that if hotels offer a better deal to customers that book direct, then they'll either not be listed on the platform, or else they'll be downranked in the algorithm, and turn up at the bottom of the search listings.
ADSHEAD:
Geez.
LEIGH:
That's bad for Aussie hotel operators, and in the end, it's bad for travellers.
ADSHEAD:
Okay, something's prompted this though, Andrew. What is it that's come to your attention?
LEIGH:
Well, it's the stories that I get when I'm talking with local hoteliers about the amount that they have to pay to Booking. It seems that these costs vary, but certainly double-digit fees are something I hear about pretty regularly. There's a story today in The Conversation that's reporting a 20 per cent fee. So, if you're charging 20 per cent for simply processing the booking, that seems a pretty hefty whack, and you want to make sure that as with other digital platforms, they're not throwing their weight around.
We know that government has a role in checking monopoly power, because monopolists tend to charge higher prices than is ideal for consumers. So, as the Assistant Minister for Competition, I'm very keen to make sure that consumers get the very best deal they can when they're out there travelling.
ADSHEAD:
So what are you looking at here? Are you looking at some form of inquiry, are you looking for submissions? How are you going to get the evidence that may prove the point you’re making?
LEIGH:
We've got an inquiry on foot through the Australian Treasury with submissions opening at the end of last month and closing at the beginning of next month. And that's asking tourism operators, platform operators, anyone else in the accommodation space. "Tell us your stories, tell us how big the fees are, tell us how these monopoly providers are operating, tell us whether they're actually engaging in this kind of algorithmic punishment of putting hotels down the bottom of the ranking if they're offering a better deal to customers that book direct."
And in the end, Don Farrell, who's the Tourism Minister, and I as the Assistant Competition Minister, want to make sure that consumers are getting the best deal, and that more of the money is staying with those Aussie hotels who are really the ones doing the hard work when you're travelling.
ADSHEAD:
I have noticed more and more on the actual hotels' websites that they are encouraging people - consumers, to come direct to them. Is that, you know, the reason that they know that they're being gouged somewhat in terms of those booking fees?
LEIGH:
Yeah, I think that's right. I mean they probably wouldn't bother asking people to book direct with them if the fee was just 1 or 2 per cent, but if the fee, as reported, is 20 per cent, you can understand why they'd want people to book direct.
And so, if you're out on the road travelling over this Christmas season, you might consider booking a hotel direct rather than always going through the sort of Wotifs, Hotels.com, Trivago, Booking.com, those kinds of websites. The advantage of booking direct is you know your money is going to the hotel.
ADSHEAD:
And do you think that it's something that could be turned around? Can you see and envisage a way that, you know, as we've had to, and as more and more technology's there, as more and more Internet platforms take over sort of day‑to‑day life and consumer life, do you think there's a way of turning this around if you've got the evidence to prove what you're saying?
LEIGH:
Absolutely. The Australian Competition Consumer Commission isn't afraid to stand up to the big digital platforms. They've just held an important inquiry which is looking at platforms such as Google, which has 95 per cent of the search market, Facebook, the big player in social media, looking at the role of the Apple App Store as being a gatekeeper into that ecosystem, or Amazon Marketplace, or eBay, as key gatekeepers in their marketplaces.
We need to make sure that these big digital services providers, which we all use from day‑to‑day, are doing the right thing by Australian consumers.
ADSHEAD:
Do you think that you could also affect change if it's me booking through one of these websites - a hotel in another country?
LEIGH:
If you're travelling you should certainly be considering booking direct, but search engines are handy, there's no doubt about it, that's why so many people have chosen to use them, but there is also an advantage; you've got a bit of time up your sleeve in making the booking direct with the hotel, and so that hotel owner, who's the one that's going to be looking after you when you stay, gets all the benefits of the dollar that you're spending.
ADSHEAD:
And the people who are behind these websites, I mean, invariably, they may have agents or representatives here in Australia, but you're talking offshore, aren't we?
LEIGH:
That's right, so Expedia is a US firm, Booking.com is a Dutch firm; they are multinational platforms, and so, you know, unlike most of the local hotel industry, which really is Australian owned and operated, these are offshore multinational platforms. Nothing wrong with multinationals — some of my best friends and so on — but in the end we want to make sure that Australian small businesses aren't being dudded out of these arrangements.
ADSHEAD:
And you might be aware that it has been a similar kind of case that was run, and that was around Flight Centre and the way that they were trying to induce the airlines not to undercut them on ticket prices, and so on. So we've been down this path, and I know that there was indeed a prosecution there, wasn't there?
LEIGH:
Yeah, that's right, and so that's one of the examples that we're looking at, whether or not that provides sufficient comfort to regulators, or whether it's necessary to do something specific in this booking space. We're doing the consultation now, because we want to have all the facts in front of us, but in the end our values are very clear. We want a thriving competitive Aussie hotel and accommodation sector, as they come out of the tough times of COVID, we want them to be getting every dollar that they deserve.
ADSHEAD:
Andrew, thanks very much for speaking with us today, I appreciate that.
LEIGH:
Always a pleasure. Thanks again.
ADSHEAD:
Good on you. That's Andrew Leigh there. So he's the Assistant Minister of Competition, Charities and Treasury and there's clearly some questions being asked now.