Booking.com has announced that rate parity clauses will no longer apply in their agreements with hotels in the European Economic Area due to the EU Digital Markets Act (DMA). As a designated 'gatekeeper', Booking.com must comply with this regulation, allowing hotels to offer lower rates and promotions on their own websites.
At first glance this is great news, but the full impact of the DMA is still unfolding. Google's changes to comply with the DMA are already affecting hotel visibility and bookings. Understanding these changes is crucial for hoteliers looking to maintain a competitive edge.
That’s why we recently hosted a webinar to help hotels globally understand how this will impact their business. Triptease’s direct booking experts, Charlie Osmond and Rosie Green, were joined by Robert Gratzl Daremyr, Senior Distribution & Online Sales Manager at Gothia Towers & Upper House. Register here to watch it on-demand.
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What is the Digital Markets Act?
The Digital Markets Act (DMA) is a landmark piece of EU legislation aimed at curbing unfair practices by ‘gatekeepers’ in the online economy. Gatekeepers are large digital platforms that mediate transactions between business users and their customers. This includes six industry giants - Alphabet (Google), Amazon, Apple, ByteDance, Meta, Microsoft - and now also Booking.com.
The DMA’s objective is to foster a fairer digital marketplace by enforcing regulations that prevent gatekeepers from abusing their dominant positions. This legislation mandates that gatekeepers adhere to strict guidelines designed to enhance competition and transparency, ultimately benefiting both businesses and consumers.
Google’s compliance with the DMA: The impact on hotels
In response to the DMA, Google has made several significant changes aimed at levelling the playing field for vertical search services (VSS) and other suppliers.
1. Equal treatment of links: Google now ensures that links to its own services are treated the same as links to other VSSs. This means that when a user searches for hotels, links to hotel websites and other booking platforms will receive equal visibility, potentially increasing direct bookings for hotels.
2. Expanded opportunities for VSS: By providing more visibility and opportunities for VSSs, Google is opening up the marketplace, allowing hotels to compete more effectively with OTAs on its search platform.
3. Whole page refinements: Google’s search results now include more comprehensive information, encompassing a wider range of services and options. This holistic approach offers users richer results, including those from various VSSs, enhancing the overall search experience.
4. New filters for web results: The introduction of new filters in web results allows users to narrow down their search more effectively, helping potential guests find the most relevant hotel options quickly.
While these changes are intended to comply with the DMA and foster fair competition, they might also dilute the visibility that some hotels previously enjoyed, making it more challenging to stand out unless they optimize their online presence effectively.
Booking.com’s response: The end of rate parity clauses?
Following its designation as a gatekeeper, Booking.com has also made some notable adjustments. One of the most impactful changes is the removal of rate parity clauses in their agreements with hotels within the European Economic Area.
Hotels can now offer lower rates and promotions on their own websites without being undercut by Booking.com’s contractual rate parity clauses. This is a significant win for hotels aiming to drive direct bookings. That said, while pricing remains the most important part of a guest’s decision-making process when booking, there’s still a chance that those guests won’t find their way to your hotel when you’re up against Booking.com’s colossal marketing budget. In 2023 alone, Booking.com spent $6.8 billion on marketing, highlighting the scale of competition.
To capitalize on this opportunity, hotels need to invest in enhancing their direct online channels. This includes upgrading website technology, improving digital marketing strategies, and creating compelling direct booking offers that can rival those of OTAs.
Watch the on-demand webinar to learn more
If you’re navigating the complexities of the DMA and its implications for your hotel, our on-demand webinar is an essential resource. Here’s what you can expect:
- The current impact on hotels: How Google's DMA compliance is reshaping hotel bookings, even outside the EU.
- Changes in OTA practices: Potential benefits for your hotel from DMA-driven changes.
- Real-world insights: Navigating the DMA’s impact from a European hotelier's perspective.
- Actionable strategies: Strengthen your direct booking strategy in this new landscape.
Don’t miss this opportunity to stay ahead of the curve and ensure your hotel thrives as a result of these regulatory changes. Get the knowledge and strategies needed to navigate this evolving digital landscape.
