Online booking systems are price gouging accommodation providers and holidaymakers in the region by hiking the price of hotel rooms sometimes in excess of $12,000 a night.
A search on one site showed a Margaret River hotel advertised at around $12,500 a night, but if you go directly onto the accommodation provider's website the same room is advertised between $199 to $249 a night.
Registered Accommodation Providers of the Margaret River Region spokesperson Debbie Noonan said business owners first became aware of the problem when they started receiving complaints and bad reviews about value for money.
Ms Noonan said one business owner contacted an online booking platform which had advertised rooms for $10,000 a night believing they had made a mistake after they had fed through rates at $200.
After the owner contacted the online booking platform the room was then advertised at $5,000 later that day.
Ms Noonan said the online booking platforms have been pocketing the difference and the business owners had been none the wiser until people complained about value for money.
"As operators we feed through our rates in good faith that the online booking platforms would advertise the correct pricing to the public," she said.
"It is impossible for accommodation providers to monitor online booking platforms 24/7 and it appears this hike in pricing is happening during peak times.
"It appears the online booking platforms are cashing in on our busy periods."
While it may appear to be unethical, an Australian Competition and Consumer Commission spokesperson said it was unlikely that the behaviour was illegal.
The ACCC spokesperson said parity clauses in contracts sometimes required accommodation providers to offer their best price and availability to online booking sites.
"But it is unlikely to be illegal for an online booking site to charge more than a hotel or motel," the spokesperson said.
"The agreement in place between an online booking site and an accommodation provider will likely set out the terms and conditions in relation to prices and fees.
"The ACCC encourages Australian consumers to call accommodation providers directly to see if they could get a better deal than what is advertised online."
Tourism Minister Paul Papalia encouraged holidaymakers to visit the Tourism WA website which linked them directly with WA operators to make bookings.
"While encouraging West Aussies to book direct, we also recognise that many WA tourism operators choose to use third party distribution partners in order to reach wider audiences than they may be able to reach via their own advertising and distribution strategies," he said.
"We are always enthusiastic to drive direct bookings to our WA operators.
"At the moment, Tourism WA is largely focused on this goal, but the organisation also works in partnership with other WA-owned partners such as RAC and Sightseeing Pass."
Warren-Blackwood MLA Terry Redman said the tourism minister had pleaded ignorance over the growing trend of overseas accommodation booking platforms price gouging at the expense of accommodation provider's reputation in the South West.
Mr Redman said booking platforms were dialing up the cost and taking a larger proportional cut of accommodation nights while providers only received a pre-set floor and no benefit from inflated pricing.
"The minister denied any awareness of overseas platforms increasing prices without the knowledge of providers and his only advice was for anyone experiencing it to report it to Tourism WA," he said.
"The inference from a consumer perspective was that high prices were set by providers and reflected badly when visitors to the region reviewed the value of accommodation product paid for.
"The regional tourism industry is welcoming visitors and working hard to provide the best possible experience at the most reasonable value to people exploring our part of the world.
"We have a lot to offer but inflated accommodation pricing as a result of online booking platforms taking advantage of providers, risks putting a dent in the reputation of our region and tourism industry.
"And the fact these platforms are based outside Australia and don't pay tax in our country despite taking all the cream makes it all the more frustrating."