In December 2020, the Croatian Competition Agency (the “Agency”) published a summary of its’ analysis of the online booking market. The analysis came as a result of a growing influence of digital economy in the accommodation sector, both globally and in Croatia, as a significant tourist destination.
The main focus of the sector inquiry was to investigate the contractual relationship between online traveling agencies (“OTA”) and accommodation providers, implementation of regulatory framework and the broader competitive conditions on the market by defining the main indicators of the market position for online booking services. During the sector inquiry, the Agency also collected data regarding pricing policies of different OTAs.
With respect to the regulatory framework, the Agency found that even though there is no specific regulation for online hotel booking industry, the rules for consumer protection and e-commerce provide a certain regulatory framework for consumer protection and information society services.
As far as the market structure goes, the leader in Croatia is Booking.com with market share of 60-70% in 2017 and 70-80% in 2018 for bookings made through OTAs and its market share is expected to grow further. Expedia is the second largest market shareholder with 20-30% in 2017 and 10-20% in 2018. These OTAs are followed by Hotelbeds.com, HRS, Prestigia.com, Kuoni Global Travel Services, etc. When compared to global figures, the Croatian market share trends are broadly similar.
Regarding sales models used by accommodation providers in Croatia, the Agency determined that all undertakings use traditional sales channels (call centers, walk-in bookings and sales at the reception of the accommodation facility and their own digital platforms on their websites). However, the market analysis showed that the accommodation providers have also been increasingly using OTAs as an indirect sales channel. There are some additional sales models such as allotment purchase from a tour operator, traditional travel agencies, group rates, a global distribution system, congress and event sale and DMC (Destination Management Companies). However, almost all accommodation providers reported that more bookings are made through OTA platforms compared to using accommodation provider’s digital platforms. Providers report a significant increase in online bookings in both 2017 and 2018. When comparing 2018 and 2017, 42 and 24% more bookings were made through OTAs and their own on-line platforms, respectively.
Furthermore, the Agency included an analysis of OTAs general terms of business and provisions of contracts between OTAs and accommodation partners. Regarding parity clauses (most-favored nation clause-MFN), the Agency concluded that they are a part of general terms of business and/or contracts with accommodation partners, whether as a wide parity clause or a narrow parity clause. As a reminder, the use of parity clauses was also questioned by competition authorities in different EU Member States’ practice, with differing results. Per the inquiry, 47% of the participants of a survey across ten Member States did not know OTAs ceased to use or changed their parity clauses. Further, accommodation providers stated that they did not use different prices for OTAs and other models of sale.
The market for online booking will obviously be closely watched in the years to come, both in the overarching context of the evolving positions towards digital platforms, and as an important building block in the post-COVID 19 recovery.