Opinion: Motels hit in pocket by online booking sites

Darrin Walsh (pictured) and Michael Barnett have spoken out about online booking sites for motels. PHOTO/FILE

Online booking technology allowing anyone, anywhere in the world to book a Rotorua motel has clearly helped boost local tourism.

But it is coming with an increasingly high cost to moteliers, it seems. We have been informed booking agencies based overseas have driven up commission fees from 10 per cent a few years ago to anywhere between 15 and 30 per cent now.

If our information is correct, and we have no reason to doubt it, Rotorua and other New Zealand destinations are missing out on tens of millions of dollars a year as a result of moteliers paying high commission fees, primarily to overseas online booking sites.

The leakage overseas of an excessive amount of commission to online travel agents means local businesses, especially tradespersons - painters, plumbers, electricians, furniture shops, etc - miss out on work to improve properties. The opportunity to invest in employment areas such as staff training and better rates of pay is also being held back. For moteliers themselves the high fees they need to pay to online travel agents to ensure they get bookings is becoming something of a blind trap. As the percentage of direct bookings reduces and online bookings increase, the bottom line keeps diminishing.

This is not just a Rotorua or industry problem, we suggest. This is about the New Zealand economy as a whole.

Significant tax revenue is also being lost. Overseas booking sites are not paying GST and the hotel is unable to claim GST. And the overseas site is not paying true income tax to the New Zealand tax system on the commission.

Is the industry concerned and how big is the tax loss? These are just two obvious questions that need investigation.

We suggest that we need some action, and with a sense of urgency. With the potential savings and gains to the New Zealand economy and reflecting the importance of tourism in the New Zealand economy is it worth the Government investing in a steering group to get a sense of how big the problem is and what can be done about it?

Our view is that we need to find a way to get back control of our own destiny and a fairer level playing field before small hotel/motel businesses in Rotorua become unsustainable in the tourism sector and we all suffer. It's about taking preventive measures before the problem gets out of control.

What we need to do appears to be obvious and simple; find a way to get back to a system of more direct bookings via the motel or empower online operators overseas to charge a fairer fee as well as sign up to the New Zealand tax system. Otherwise this problem will continue to plague the industry, and with significant flow-on impacts to our tax system.

But how we make it happen is less simple. The first step has to be to get a better understanding of the problem and to commit ourselves to taking action and for this establishing a steering group to investigate would seem to make sense?

- Darrin Walsh is chief executive of the Rotorua Chamber of Commerce. Michael Barnett is chief executive of the Auckland Chamber of Commerce and a member of the Grow Rotorua Board.