While local tour operators have long complained that hotels offer them contract rates that are higher or similar to the dynamic rates offered to OTAs, the gap has widened in recent months to place traditional travel consultants at the losing end.
Arokia Das, senior manager at Luxury Tours Malaysia, shared: “A year ago, OTAs were offered rooms without breakfast at slightly higher rates. This year, they get rooms with breakfast at rates that are lower than what we get.”
The average contract rate for a four-star hotel ranges from RM220 (US$61) to RM250 for local travel consultants, but OTAs get rates as low as RM190, including breakfast, he said. “This is happening because hotels need business and there is an oversupply of rooms.” As a result, “local players lose out to OTAs who make money and are not even based here”, he opined.
Agreeing, Ally Bhoonee, executive director of World Avenues, said this is unfair to travel consultants who have invested in destination promotion. “It also makes the destination look ‘desperate’ to overseas outbound tour operators, who will take full advantage and squeeze the local travel consultants for further discounts.
“The industry – Malaysian Association of Hotels (MAH), Malaysian Association of Tour & Travel Agents and the Ministry of Tourism and Culture – must come together to find a solution to this issue,” he said.
However, MAH president, Cheah Swee Hee, told TTG Asia e-Daily the association does not regulate rates as “This is a free market”.
Asked whether there is a solution to rate parity, he said: “If travel consultants want good rates they must also be able to commit a certain number of room nights to the hotel.”
Meanwhile, Alex Lee, CEO of Ping Anchorage Travel & Tours, has found a way out of competing against OTAs by diversifying into the hospitality industry with the 22-room boutique hotel, Terrapuri Heritage Village, in Penarik, Terengganu.
He said: “We sell rooms to OTAs and traditional travel consultants, and we have also diversified to offer services to small inbound MICE and bespoke programmes to high-end clients.”