Lex Booking has no influence on Switzerland

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Booking a hotel room in Switzerland is often more expensive on Booking.com than booking directly with the hotel. This has been the case since the so-called “price parity clause” was removed, as reported by Blick. With the price parity clause in the contracts, the hotel reservation giant Booking previously required hotels not to offer cheaper prices than Booking on their websites.

This practice has been banned for all online booking portals in Switzerland since December 2022: Due to Booking.com’s dominance of power, the new law is popularly known as Lex Booking. Switzerland just did the same. Germany, France, Italy, Austria and Belgium had previously banned equal price provisions.

But Booking.com isn’t backing down. The European Court of Justice has to decide on a referral from the Amsterdam District Court. Booking.com argues that price parity ensures fair conditions and online platforms are pro-competitive. For example, by providing transparency in prices and thus keeping the price level low for consumers. In addition, booking portals are expanding the market by making many more offers easily accessible.

A useless law?

For now, this will have no effect on Switzerland: a decision of the European Court of Justice is binding only for the EU.

Nadine Stachel (44), Regional Manager Germany/Austria/Switzerland at Booking.com, states that Switzerland would never need a new law: “If negative effects on the market had been identified, competition law would have been sufficient”.

An external study commissioned by the federal government on “regulatory impact assessment” by Bern-based research office Ecoplan concluded that in 2020 the new law wouldn’t do much. Accordingly, Swiss hotels should not expect an increase in their earnings, and intermediary platforms should not be afraid that from now on, users will make their reservations entirely on the websites of the hotels.

No significant market changes

Did this happen? Stachel believes it is too early for a binding statement. But he explains: “When a similar change occurred in Germany in 2015, we did not notice any loss in jobs.” It does not report specific job figures for Switzerland.

However, the new situation is not trivial for the Amsterdam-based booking portal. The successful business model implemented for 25 years is under pressure.

advance payment is required.

Booking saves money by taking commission on every hotel stay. But only if Booking.com manages to forward a reservation to a partner. “In Switzerland we get an average of twelve percent,” says Stachel. The platform earns nothing if the guest book directly with the hotel.

This is unfair as Booking.com makes their offers globally visible and “pays in advance”. According to Stachelen, “millions are invested” so that hotel offers appear on a modern and mobile-friendly platform, are available in 44 languages, and can be found on any relevant search engine such as Google, Yahoo or Baidu. “This type of investment in customer acquisition cannot be made by hotels in the SME segment,” Stachel says.

With price parity, Booking.com ensures that the hotel does not use transmitted customer attention to encourage guests to book directly at low prices.

Hotels rely on cooperation

Can’t hotels that pay for Booking.com’s “advance service” solve the problem? That’s not a problem, Stachel replies. Hotels should continue to be allowed to register with Booking.com for free. This is also in the interest of SMEs who cannot afford such a fee unlike large hotel chains like Hilton, Accor or Marriott.

Compared to Blick, hoteliers argued that they now have more freedom in pricing. But no one can do without cooperation with Booking.com. Especially since Booking.com and other portals penalize hotels that openly and regularly deviate from price parity with a lower ranking on their website. At least that’s what the hotels in the “HTR” newspaper say.

Booking.com is currently the only way: the platform now offers not only hotels, but also holiday apartments, flights and package tours.

Source :Blick