The competition watchdog has reached a deal with travel sites Expedia and Booking.com to allow hotels to provide cheaper rates to customers booking on the phone or through walk-ins, but noton the hotels' actual website.
The Australian Competition and Consumer Commission said price and availability parity clauses from the online travel agencies guaranteed the sites would always have the accommodation provider's lowest rate, preventing consumers from negotiating better deals directly with the provider.
The ACCC said Australian accommodation providers could now offer cheaper special rates for telephone bookings, walk-ins and to loyalty groups.
But the new arrangements exclude a hotel's own website, on which it would still not be able to advertise cheaper rates than Expedia and Booking.com.
Cheaper rates can only be accessed if consumers phone or do walk-in bookings with the hotel.
Tourism Accommodation Australia is concerned the agreement will still undercut hotels' ability to have competitive pricing, given that 60 to 95 per cent of hotel bookings are made online.
"The decision to allow online agencies to prohibit hotels from offering lower rates online clearly lessened competition and was detrimental to hotels and travellers," said TAA chief executive Carol Giuseppi.
"We advised the ACCC it should have insisted that online travel agencies allow hotels to set their own rates online."
The TAA said France had legislated to prevent online travel agencies from restricting hotels offering lower rates online and offline, while Germany is moving to do the same.
Over 500 responses were submitted to an inquiry about dealings with online travel sites and the ACCC said the key issues were broad price parity and room availability clauses.
From September 1, Expedia, which includes Wotif.com, and Booking.com have removed the contractual requirements.
In July 2014, US online travel giant Expedia paid $703 million for Wotif.
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