Milestone 1: Discussing the relationship between OTAs and Hostel Operators
During a meeting at WYSTC Sydney a group of leading hostel operators discussed their relationships with Online Travel Agents (OTAs). Three main conclusion were drawn from the meeting:
- It has been acknowledged that OTAs and youth travel accommodation operators are mutually dependent. OTAs benefit by broadening the variety of product they offer, while youth travel accommodation providers have gained distribution to customers in markets where they are less well known.
- Youth travellers have gained most – by from being able to access a broad range of accommodation options, coupled with customer reviews and location content.
- Despite the many benefits for all parties involved, it was also concluded that a sensible reset must be found in the relationship between OTAs and youth travel accommodation providers which, over time, has become less and less commercially balanced.
Milestone 2: Establishing fair practices in online distribution: Sydney Declaration 2013
Following the meeting a position statement was agreed upon by the hostels in attendance regarding online distribution practices. The goal of the code of practice was to represent a constructive and balanced approach to reset the relationship between OTAs and hostel operators and to create a better deal for consumers and to promote genuine competition. It reads as follows:
Agreements between OTAs and youth travel accommodation operators should not contain clauses that:
- Allow the use of property or brand names in online advertising, unless specifically authorised;
- Require rate parity;
- Enforce mandatory availability parity (either via last room availability or minimum allocations);
- Allow for agreements to be terminated at short notice (without a compelling cause), with no consultation and without being signed by both parties;
- Are not written in plain English (and are not translated into the main official language of the operator);
- Conflict with national or international trade, competition or consumer laws;
- Require operators to indemnify OTAs for tax obligations on commissions;
- Allow the OTAs to be opaque in how they display default search results (including the use of spurious” recommended” terms that are designed to mislead consumers, when the basis of recommendation is the % commission paid or the availability given to the OTA);
- Result in commissions being paid on no shows or any other unrealised turnover.
- Discriminate against an operator based on size or location.
Milestone 3: Sydney Declaration review process 2015 – 2016
During a meeting at WYSTC Cape Town (2015) hostel operators in attendance agreed that the 2013 Sydney Declaration required updating in the light of recent changes in the OTA market. In preparation of a Distribution Roundtable at WYSTC 2016 in Belgrade a Briefing Paper was released in September 2016. The purpose of the briefing paper was to allow all roundtable participants to gain a common understanding of current issues areas and the status quo with regards to the relationship between OTAs and hostel operators in order to create a common knowledge base necessary for an informed discussion.
During WYSTC 2016 in Belgrade over 35 accommodation providers as well as two OTAs discussed the most pressing issues between online platforms and accommodation providers. Topics included rate parity, commission, brand ownership, the increasing market consolidation and market power of OTAs.
The general consent of the discussion was that the issue areas in the declaration are still on-going and that the declaration is addressing those issues. Therefore, the content of the Sydney Declaration should basically remain the same. It was agreed that an additional clause about ways to prevent criminal activities such as visa fraud should be added to the declaration. At the same time some of the roundtable participants suggested that the wording of the Sydney Declaration could be adjusted to emphasize what the relationship between OTAs and accommodation provider should look like rather than what it should not look like.
After circulating the draft document with important relevant stakeholders and receiving valuable feedback from member organisations such as YHA Australia, which has been very actively involved in initiating and drafting the Sydney Declaration, the updated document has been reissued in April 2017.
Milestone 4: Adoption of the Sydney Declaration 2017
What is new in the Sydney Declaration?
- A different, more constructive wording – you can directly compare the 2013 and the 2017 Declaration on our overview page.
- Additional clauses:
- OTAs sometimes decline to share contact details of customers with the Hostels with them. Withholding this information does not allow for an efficient communication between the hostel operator and their guests.
- Hostels are increasingly confronted with fake bookings in order to obtain a visa letter. OTAs are therefor being encouraged to share all personal information necessary with the hostel to prevent or reduce fraudulent bookings.
The updated Sydney Declaration 2017 reads as follows:
Agreements between Online Travel Agents (OTAs) and Hostels should be reflective of the following principles:
- OTAs should seek prior approval from Hostels for using property and/or brand names in advertisements and promotions;
- Agreements should be based on a legal framework that does not require or enforce rate and availability parity;
- Agreements should include fair and reasonable notice periods and times;
- Agreements should be written in plain and precise language;
- Agreements should be in line with trade, competition and consumer laws in the Hostel’s and OTA’s jurisdictions;
- Agreements should not require Hostels to indemnify OTAs for tax obligations on commissions;
- Agreements should ensure that commission to OTAs is only paid for consumed bookings;
- OTAs should treat all Hostels equally regardless of size and location;
- OTAs should provide Hostels with all required personal information including email addresses to allow the provision of efficient and personalised services to guests. (A positive relationship between the Hostel and guest will also be positive for the OTA);
- Agreements should ensure that OTAs provide all personal information required to comply with all applicable laws in the Hostel’s jurisdiction;
- Agreements should ensure that OTAs can only offer rooms/beds at rates set by the Hostel operator. OTAs should not offer a given bed/room at different rates in different locations depending on the country or city from which the OTA is accessed. OTAs should not be able to undercut the rates as given to them by the Hostel without permission;
- Agreements should ensure that Hostels can determine their own cancellation policies;
- Agreements should ensure that OTAs do not advertise alternatives for the same nights to guests who have confirmed with a Hostel on their system;
- Agreements should ensure that Hostels do not have to honour or hold bookings for which a credit card has been declined and an alternative has not been charged.
Next steps: Increasing and deepening the impact of the Sydney Declaration
If you would like to support the Sydney Declaration 2017 and help us improve the relationship between OTAs and the accommodation industry, you can do the following:
- Sign it
- Share it on social, on your website or on your email signatures.
- Refer to it with your OTAs
- Don’t forget to let us know in which situations you actively used the Sydney Declaration
If you have any questions about the Sydney Declaration, please contact us at any time.