- First reduction of brokerage fees for small businesses listed on platforms -
On Thursday, September 5th, at 3:00 p.m., the “Announcement of Self-Regulation Measures for Accommodation Platforms” took place at The-K Hotel Seoul.
This event was attended by two accommodation platform operators, Yanolja and Yeogi Eottae, as well as members from the Korea Internet Corporations Association, the Korea Central Hotel Association, the Korea Federation of Micro Enterprises, the Korea Federation of SMEs, and other self-regulatory organizations. Government officials, including the Vice Chairperson of the Fair Trade Commission, were also present.
The self-regulation measures aim to:
- Establish measures to alleviate the burden on affiliated small businesses (franchisees),
- Improve the contract practices for listings,
- Enhance dispute resolution procedures between platforms and affiliated businesses (franchisees).
These measures are expected to contribute to fair trading practices in the accommodation platform market and reduce the financial burden on listed businesses. Notably, for the first time, all participating platform operators agreed to reduce brokerage fees for small businesses listed on their platforms.
Considering the complex interests in the platform market, the government has promoted self-regulation as a national policy to prioritize resolving power imbalances between platform operators and small businesses. As a result, self-regulation measures for major platform sectors, including delivery apps (March 2023), open markets (May 2023), and accommodation apps, have been established and are now being implemented.
In the accommodation app sector, discussions began in September of last year, and after a year of collaboration among private participants, the "Self-Regulation Measures for Accommodation Platforms" have been finalized. Unlike previous measures for delivery apps and open markets, all platform operators involved in this agreement announced the reduction of fees for small businesses as part of their cooperative efforts.
The self-regulation measures consist of three main sections:
- Creating a cooperative and burden-relieving plan for affiliated businesses (franchisees),
- Improving contract practices for listings,
- Enhancing dispute resolution procedures between platforms and affiliated businesses (franchisees).
1. Cooperative and Burden-Relieving Plan for Affiliated Businesses (Franchisees)
Accommodation platform operators have developed various measures, including reducing brokerage fees, to alleviate the difficulties faced by small business owners listed on the platforms, especially given the current challenges of high inflation and interest rates.
Both Yanolja and Yeogi Eottae will temporarily reduce brokerage fees by 1 percentage point (from 10% to 9%) for the bottom 40% of small businesses listed in the motel sector of their platforms. This fee reduction will apply to approximately 3,500 businesses on Yanolja and 2,800 businesses on Yeogi Eottae, totaling around 6,300 businesses (including overlaps). Yanolja’s fee reduction will be implemented from January 2025 for 18 months, while Yeogi Eottae will implement it from November 2024 for one year.
Additionally, Yanolja provides a service that connects small businesses with international online travel agencies (OTAs) without requiring them to be listed directly on those OTAs. Initially, Yanolja planned to start charging for this service, considering translation costs, but it has decided to extend the service for free for an additional year to support small businesses in expanding their sales channels and reducing burdens. Examples of OTAs include Agoda, Trip.com, and Traveloka.
Yanolja also plans to offer a service that connects small businesses with over 17,000 travel agencies free of charge by the end of the year.
2. Improving Contract Practices for Listings
Accommodation platform operators will be required to include specific terms and conditions in their contracts with small businesses, such as the contract period and reasons for termination. They must also explain key terms, including payment settlement cycles and search result display criteria, on their websites or through the contract itself. Additionally, platform operators must give prior notice when making changes to listing agreements. These measures aim to prevent disputes between platform operators and small businesses.
3. Enhancing Dispute Resolution Procedures Between Platforms and Affiliated Businesses
To resolve disputes between platform operators and listed small businesses in a fair and independent manner, a "Self-Regulation Dispute Resolution Council" (tentative name) will be established. The specific details of this council will be finalized by November 2024 through discussions among platform operators, with a trial operation to begin by February 2025 before full implementation.
Other Matters
To ensure the effective implementation of self-regulation, the self-regulatory organization will conduct two evaluations of the measures by 2025. If any platform operator fails to comply with the regulations without reasonable cause, they will first receive a warning. If non-compliance continues or is repeated without justification, the non-compliant operators and their violations will be publicly disclosed.