Australian hostel operators reject Hostelworld contract (BTN)

Hostel members of the Backpacker Operators Association (BOA) of New South Wales met in Sydney yesterday to review the new Hostelworld contract and were unanimous in their rejection of it. In the room were both independent Sydney hostels and the chains with hostels in Australia and New Zealand.

BTN estimates over 13,000 hostel beds were represented.

hostelworldMajor concerns were that the contract was unfair together with the manner in which it was being introduced, how it could be enforced and how it could be easily changed. The elephant in the room was the takeover announced by Hostelworld of its main competitor Hostelbookers and the fear being about reduction in competition. The takeover is still subject to UK regulatory approval. The meeting also recognised that the agreements of other online travel agents were also increasingly demanding and one sided and that Hostelworld was not alone in its initiative.

There was comment about each agreement pushing one step further regarding rate parity, availability parity and marketing activities. It was said this left hostels as commodities with little control of their distribution or yield management, competing on commission payable to the detriment of the customer. There was considerable discussion about enforceability of the terms of these contracts and it was suggested that technology was making this easier for the online agents.

Decisions of the meeting included a request to BOA to seek legal advice on behalf of its members for a collective response; to make contact with the Australian Hotels Association and the Accommodation Association of Australia to tap into their expertise in advising their hotel members on online travel agent agreements; to make a submission to the Australian Competition and Consumer Commission setting out the main issues.

An email from Carmel Dunne, VP of Accommodation Relations at Hostelworld was tabled. This provided the company’s response to points raised in advance. It was received with little support. Those present felt it was self serving and that the main argument was that some of our (Hostelworld’s) competitors are doing this or are going to do this so we must also. The email did disclose new information which was that Hostelworld is shortly to launch a tool which will enable hostels to opt in to paying a higher commission day by day to raise their listing on their city page. To see a copy of the letter please click here.

The meeting included the attendance of some hostels that were not members of BOA. BOA Committee members said that the organisation will gain new members who want to work co-operatively on this issue.

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