ACCC releases draft decision for BE Sydney’s Hotel Agreement

Watchdog satisfied benefits will outweigh any detriments

The Australian Competition and Consumer Commission (ACCC) has issued a favourable Draft Determination for Business Events Sydney‘s proposed Hotel Agreement aimed at securing international business events of 2,000 or more delegates.

As LATTE exclusively revealed in July, BESydney sought approval for a 20-year agreement with its hotel and accommodation partners. The minimum terms of the proposal comprise room release and cancellation policies, free room concessions, force majeure policies, lowest rate guarantees and quote validity policies.

The BESydney members participating in the agreement consist of 13 five-star hotels, six 4.5-star hotels and three four-star hotels. Properties include InterContinental Sydney, Sofitel Sydney Darling Harbour, The Westin Sydney, Shangri-La Hotel Sydney and Sofitel Sydney Wentworth.

Late last week the competition watchdog handed down its draft determination, saying it was satisfied that the proposed conduct “is likely to result in public benefits” that would outweigh any likely detriment to the public, “including any lessening of competition”.

The ACCC said it considered the proposal would be unlikely to lessen competition in the supply of hotel services for international business events, and the supply of hotel services in the Sydney CBD or Greater Sydney. It also agreed that the pact would likely reduce event organiser and hotel search, administrative and negotiation costs.

The regulator had the ability to reduce the flagged length of authorisation, which in this case was as long as possible, and sought for “no less than 20 years”. However it found the length of term justified, agreeing with BESydney’s submission that “a long time period is needed as the lead time to secure and deliver major international events can be up to 15 years or more.”

“The ACCC considers that a 20 year period of authorisation is appropriate in this matter, given the low likelihood of any detriments arising from the Proposed Conduct and the limited scope of the Proposed Conduct.”

The competition watchdog is inviting submissions in response to its draft decision, to be lodged by 12 September 2019, and expects to deliver its final determination later this month.

Image credit: ICC Sydney

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