Dick Smith Says Foreign Booking Sites ‘Leech’ Off Australians

Australian entrepreneur Dick Smith has released a video on his website saying that foreign booking sites are “leeching” off Australians by taking advantage of small accommodation businesses, alleging false advertising.

In the video, Dick Smith said he contacted small hotels that advertised on foreign online booking sites to learn why the owners would give up potential profit to these billionaire companies.

“Why would you want to be paying these huge American multi-billionaire companies 20 percent? That might be all your profit,” Smith would ask.

In his video, Smith shared some of the responses he received from the small business owners he spoke with.

“Dick, we have to. Now, 50 percent of bookings come from these online sites,” one business owner told Smith. “And if we don’t sign up with them we lose 50 percent of our business, we go broke.”

Smith said these “big multi-national companies” have made a deal with Google that allows their website to be placed at the top of the search results.

Although these small motels all have their own websites, Smith said that they show up on the fourth or fifth page when searched on Google. Adding to the difficulty of surviving without making a deal with big transnational online booking agencies.

Government’s Secret Deal with Two Booking Giants

Smith said that a contract made between the Australian Competition and Consumer Commission (ACCC) and the two biggest travel agencies is making it impossible for small accommodation businesses to advertise for cheaper.

Although the contract hasn’t been made public, CEO of Accommodation Association of Australia (AAA), Richard Munro, thinks “consumers will be worse off under this hidden arrangement,” Hotel Management reported.

Munro estimates that consumers will be paying 20 percent more for a room due to the secret commissions charged by “offshore global behemoths.”

He said that the biggest concern is that small businesses “are prevented from advertising on their own websites a lower room-rate than what these online travel agencies display.”

Although there are many online booking sites, Smith said that they are run by two huge companies.

Munro said in a media release that the two “global behemoths” are Expedia, which runs Expedia, Wotif, Hotels.com, and Trivago brands, and the Priceline Group, which runs Booking.com.

He added that the “global behemoths” secure almost 85 percent of accommodation bookings in Australia, despite employing very few Australians and paying “virtually no tax.”

CEO of Tourism Accommodation Australia (TAA), Carol Giuseppi, said “smaller hotels in particular feel very vulnerable to the power of the global OTA (online travel agency) duopoly,” Hotel Management reported.

Smith urges people to support local accommodation businesses by booking directly with them instead of going through the major booking sites.