The End of Price Parity in the EU: A Game-Changer for Accommodation Owners
For years, accommodation providers across the European Union have been constrained by price parity clauses imposed by online travel agencies (OTAs) like Booking.com and Expedia. These clauses prevented hotels, serviced apartments, and other accommodation businesses from offering lower prices on their direct booking channels than what was listed on third-party platforms. However, major changes in EU regulations have now put an end to these restrictions.
From July 1, 2024, Booking.com removed price parity clauses from its contracts in response to the European Union’s Digital Markets Act (DMA), and the European Court of Justice (ECJ) further ruled in September 2024 that these clauses were anti-competitive. This marks a significant shift in the short-term rental and hospitality industry, creating new opportunities for property owners and managers.
In this article, we’ll explore:
How price parity clauses worked and their impact on accommodation providers.
The changes introduced in July 2024 and their implications.
How accommodation owners and managers can take advantage of the new pricing freedom.
What this means for online travel agencies (OTAs) moving forward.
What Were Price Parity Clauses, and Why Did They Exist?
Price parity clauses, also known as “rate parity” clauses, were contractual agreements enforced by major OTAs such as Booking.com, Expedia, and Agoda. These clauses ensured that accommodation providers could not offer lower rates on their direct channels (e.g., their websites, phone bookings, or email reservations) than what was displayed on the OTA platforms.
There were two main types of price parity:
Wide Parity – Accommodation providers were required to keep their rates identical across all sales channels, including their website, third-party OTAs, and offline bookings.
Narrow Parity – Hotels and short-term rental owners were allowed to offer lower prices offline (e.g., via phone or walk-ins) but were still restricted from displaying better rates on their own websites.
The justification from OTAs was that price parity ensured customers received the best available rate on their platform, preventing hotels from undercutting them after benefiting from the OTA’s marketing efforts. However, in practice, these clauses significantly limited an accommodation provider’s ability to control its own pricing strategy, forcing them to remain dependent on OTAs despite their high commission fees (typically 15–25%).
What Changed in July 2024?
Two key events led to the removal of price parity clauses in the European Union:
1. The EU Digital Markets Act (DMA)
The Digital Markets Act, introduced by the European Union, targets major online platforms (so-called “gatekeepers”) that dominate digital markets. Booking.com, classified as a gatekeeper, was required to comply with new competition rules, including the removal of unfair price parity clauses. As a result, from July 1, 2024, Booking.com voluntarily eliminated these clauses from its contracts with accommodation providers across the EU.
2. European Court of Justice Ruling (September 2024)
In September 2024, the European Court of Justice ruled that Booking.com’s price parity clauses were anti-competitive and did not qualify as “ancillary restraints” (i.e., they were not necessary for the functioning of its business model). This decision reinforced the DMA’s stance and ensured that other OTAs could not reintroduce similar clauses under different contractual terms.
With these legal and regulatory changes, accommodation providers in the EU can now freely set their own prices across different sales channels without being bound by restrictive parity agreements.
How Accommodation Owners and Managers Can Benefit
The removal of price parity clauses presents significant opportunities for serviced accommodation operators, hotels, and short-term rental managers. Here’s how you can use this change to your advantage:
1. Encourage Direct Bookings with Lower Prices
Now that you are no longer required to match OTA rates, you can offer cheaper rates on your direct booking website. This incentivises potential guests to book directly with you instead of through OTAs, allowing you to:
Save on OTA commission fees (which can be as high as 25%).
Enhance guest loyalty by offering exclusive discounts or perks for repeat bookings.
Improve your revenue per booking, as guests pay less, but you still earn more by bypassing OTA fees.
2. Leverage Exclusive Deals and Perks for Direct Bookings
Instead of simply lowering prices, you can also add value to direct bookings with:
Free early check-ins or late check-outs.
Complimentary breakfast or welcome packages.
Flexible cancellation policies for direct bookers.
Loyalty programmes and promo codes for repeat guests.
By making direct booking benefits clear on your website and social media, you can shift more business away from OTAs while maintaining profitability.
3. Optimise Your Pricing Strategy
With full control over pricing, you can now adopt a dynamic pricing strategy, adjusting rates based on demand, seasonality, and competitor analysis. Some key tactics include:
Using revenue management software (e.g., PriceLabs, Wheelhouse, Beyond Pricing) to adjust rates in real-time.
Offering last-minute discounts on your website to fill remaining availability.
Testing different price points for peak seasons versus off-peak periods.
Without OTA restrictions, you have complete freedom to experiment with pricing to maximise occupancy and revenue.
4. Enhance Your Direct Booking Platform
With more guests encouraged to book directly, it’s crucial to ensure your website is optimised for conversions. Key improvements include:
A fast, mobile-friendly booking website.
Clear pricing transparency and no hidden fees.
Simple checkout processes with multiple payment options.
Live chat support to assist potential bookers.
Additionally, investing in SEO and paid ads (e.g., Google Ads, Facebook campaigns) can further drive direct bookings.
5. Build Stronger Customer Relationships
Without OTA intermediaries, you can engage with your guests directly before, during, and after their stay. This allows you to:
Collect guest email addresses for future promotions.
Offer personalised recommendations and upsells.
Encourage direct feedback and reviews on your own website instead of relying solely on OTA review platforms.
By fostering guest loyalty, you reduce your dependency on third-party platforms and create long-term customer relationships.
How This Impacts Online Travel Agencies
The removal of price parity clauses is a significant challenge for OTAs, as it weakens their pricing advantage over direct booking channels. Here’s how they are likely to adapt:
1. Increased Competition Among OTAs
Without guaranteed price parity, OTAs must now compete more aggressively for listings and bookings. Expect:
More commission-based incentives for property owners.
Better marketing and exposure for high-performing listings.
Potential reductions in OTA fees to retain accommodation providers.
2. Greater Focus on Value-Added Services
OTAs may introduce:
Stronger loyalty programs for repeat travelers.
Enhanced customer support and flexible booking options.
More bundled services (e.g., flights + accommodation) to retain their market share.
3. Push for More Marketing Spend
OTAs are likely to increase their advertising budgets to drive bookings through their platforms, which could make direct marketing more competitive for independent accommodation providers.
The removal of price parity clauses in the EU is a major win for accommodation providers, allowing greater pricing flexibility and independence from OTAs. By optimising direct booking channels, leveraging exclusive offers, and implementing smart pricing strategies, property owners can significantly reduce their reliance on third-party platforms and boost profitability.
At the same time, OTAs will need to evolve, offering new incentives and services to retain their competitive edge. For property managers who take proactive steps now, the shift presents an unprecedented opportunity to gain control over their pricing and customer relationships like never before.
