Argentinean Hostels speak out against new Hostelworld contract

After receiving the new Hostelworld contract, the Argentina Chamber of Hostels (CAH) Board, has consulted with their members and has decided to recommend that its members reject the contract as not being in their best interest. They also have concerns about the impact the contract could have on the international hostel industry. In addition, the CAH have sent letters of support to their international colleagues who have already taken a stance against the contract including the Backpacker Operators Association (BOA) in Sydney, Australia.

LOGO 2The CAH has circulated information on its position to the Argentinean hostel community, both members and non-members. In this communication, it has urged the sector to take note of the clauses where the contract has changed from the previous contract; to review this contract with legal counsel before signing and to then send their position and comments to the CAH. The responses received by CAH showed that Argentinean Hostels were unanimous in rejecting the contract.

In particular, the CAH has asked for changes in the following clauses:

  • Distinguishes between the “deposit” taken and the “service fee”
  • 1.1.5    Ensure “availability parity” by making beds available to HW on no less favorable basis than other channels including own website(s).
  • 1.1.6 Provide HW access to all available beds as are for sale on a real time basis (ie first come first served) and always with “last bed/room availability”.
  • 2.7 Licensee agrees that data relating to the Customer who has made the booking belongs to HW and Licensee is not entitled to use it to market to the Customer.
  • 2.8 HW entitled to promote the property using its name in online marketing (including email marketing and pay-per-click advertising). Licensee grants HW license to use property name for this purpose.
  • 3.2 Order in which properties displayed by HW on Hostelworld.com and other sites determined by HW acting in its own discretion. HW entitled to generate and display search results in any manner and system of ranking it deems appropriate.
  • 9.2 HW may vary any terms with 14 days notice (instead of 28 days)

CAH also have concerns about the new ELEVATE program Hostelworld has announced (under which the hostel’s position on HW improves by increasing the paid commission to them). The CAH thinks that this will probably generate a domino effect that would cannibalize the market, would not increase the reservations for each city and, within the medium term, only HW would be the beneficiary.

At the same time, the CAH feels that the merger of Hostelbookers and Hostelworld could lead to monopolistic practices considering that this ELEVATE program policy, in the short term, would also apply on Hostelbookers now that the acquisition has been approved.

Finally, the CAH suggests hostel industry groups continue to enter into negotiations with Hostelworld to review and seek a solution to what appears to be an impending conflict.