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New guidelines to protect hotel industry: Narayana Gowda

Mysuru, February 11:- In continuance to hoteliers’ protest in Ahmedabad, more than 400 hoteliers in Mysuru have decided to regulate their terms of operation with online travel agencies and aggregators, thus put an end to exorbitant commissioning and deep discounting tactics.

These online channels entered the market under the guise of helping hotels in effectively increasing occupancy rate and revenues. But in effect, in their zeal to garner market share with seemingly unlimited funds, they have ruined the pricing and profitability balance by offering indiscriminate discounts to the customers and largely offsetting those discounts by levying high commissions.

Hijacking the property online and offline brand, hiding of actual customer rates, pitting one hotel against the other for their benefit, etc., are some of the below the belt strategies adopted that has collectively impaired the industry. These practices have inordinately increased the occupancy at a drastically reduced average price, resulting in high operating expenses. Such economics have a negative impact on business profitability and the hotel industry is now strangled for their basic existence.

Narayana Gowda, president of Hotel Owners’ Association, declared, “There is a need to create a regulatory framework to protect the industry from the predatory policies of OTAs and aggregators like OYO the way retail industry are now being protected from e-tailers.”

The major terms decided by the association for member hoteliers are;
1. TAC (Travel Agent Commission) should be restricted to 15% for Pay at Hotel (PAH) bookings and 18% for Prepaid bookings.
2. Any other means of increasing commission via schemes like PLB (Performance Linked Bonus), visibility boost, etc., should be discontinued.
3. Discounting, if any shall only be offered by the hoteliers and not OTAs.

All 400 hoteliers in Mysuru have decided that after 15th February, hoteliers will block the inventory to those OTAs who do not adhere to the terms put forth by the association.

Ravi Shastri, vice president, Karnataka Pradesh Hotel and Restaurants Association (KPHRA) quoted “There needs to be level playing field for the ecosystem partners to work in harmony for the sustenance of long term partnership.”

Bhaskar, secretary of Coorg Hotels’ Association commented that ‘Authorities should intervene to get the payments cleared from aggregators like OYO, which amounts to a few crores.’

Sooryah Prakasam Pokkali, president – Association of Hotels and Services Apartments, Bengaluru, thanked the overwhelming support received from the online partners vis-a-vis Yatra, Travelguru, ClearTrip, Paytm and booking.com for supporting the cause. (MR)

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