Wotif is raising the commissions it charges hotels and other accommodation operators from 12 to 15 per cent. Credit:Glenn Hunt Roger Alexander, the owner of the six-bedroom Lorelei B&B, said small operators' margins would probably be squeezed because they would be unable to pass on the increase in commissions to consumers as some large hoteliers were expected to do. "Raising a commission from 12 to 15 per cent is really just grabbing an extra 3 per cent of my gross revenue," he said. He lets out about 1000 rooms a year, about half of which he now sells through the Agoda website. Hoteliers and other operators also fear that Australia will follow the US and Europe where commission rates for online booking sites are as high as 20 to 25 per cent.

Mr Alexander received a call from Agoda last week to tell him that its commissions would rise from 12 to 15 per cent next month as part of a "move in line with market forces". "It is amazing what is happening at the market post that Expedia takeover of Wotif," he said. While Expedia is keeping the Wotif brand, the latter's technology, back office roles and accommodation inventory will be integrated into the global company's operations. Bradley Woods, the chief executive of the Australian Hotels Association Western Australia, said hoteliers and other industry players had raised concerns with the competition regulator last year that the removal of Wotif as an independent competitor would allow Expedia to increase its commission rates. "The users will end up paying a higher rate because of the acquisition of the last large, independent [online travel agent] operator in the market," he said.

"These concerns were brought to the ACCC's attention. The ACCC chose to ignore the issues and not place any conditions on that acquisition." The Australian Competition and Consumer Commission noted in October the concerns from hoteliers that the Wotif takeover might result in them paying higher commission rates to online travel agents. But in clearing the deal, it found that "there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years". ACCC chairman Rod Sims said on Monday that Wotif's commission rates had been trending higher before the takeover, and it had charged consumers a $5.50 booking fee that its competitors did not which made the "comparison of commission rates not quite apples with apples". "We don't know what would have happened with Wotif's charges anyway given they were already going up, and they were under pressure to push them up more," Mr Sims said.

"Our test is not so much that there is a lessening of competition, but a substantial lessening of competition. What was key for us [in deciding to allow the Wotif deal to proceed] was the other web-based entities that were now allowing bookings direct with the accommodation providers more and more, and it seemed to us that the market was opening up ... through technology." Large hotel chains tend to receive up to 20 per cent of their bookings through online travel agents such as Wotif, while smaller operators rely on them for more than half. Expedia declined to "get into specifics of our business discussions" but the US-based company said "compensation we receive reflects the value we deliver to the market". "We are introducing the Wotif Group supply partners to the power of Expedia's global reach and customer base, and we make significant investments in marketing and technology innovations, all of which drive increased customer demand for our hotel partners," it said in a statement. Amsterdam-based Priceline did not respond to questions about commission increases.

Expedia's proposed $US1.3 billion ($1.66 billion) takeover of Orbitz has also created jitters among hotel operators about the impact of further consolidation globally. Provided it gains regulatory approval, the deal will leave the US with just two large global online travel companies in Expedia and Priceline.