CMA Announces
‘Enforcement Action’
against Online Travel Agencies
4
| Hospitality Today | Summer 2018
as the leading OTA surpasses the top hotel groups in value
Perhaps the hottest topic in the hotel
sector in recent years has been the growth
in relative power of online travel agencies
(OTAs). The two biggest, Booking Holdings
and Expedia, now dominate, accounting
for some 80% of OTA bookings. Search results: how hotels are ranked, for
example to what extent search results
are influenced by factors that may not be
relevant to the customer’s requirements,
such as the amount of commission a
hotel pays the site.
The biggest OTA, Booking, is now (at $100
billion) worth more than top four global
hotel groups Marriott ($49bn), Hilton
($25bn), Accor ($13bn) and IHG ($9bn)
combined. Booking (whose group CEO is
on our front cover as perhaps the most
powerful person in our industry) see this
as their reward for giving the consumer
what it wants: an easy one-stop shop for
all things travel; however hotel and B&B
industry leaders are concerned at the
increasing imbalance of power, and what
they see as unfair and misleading practices
which have raised costs for consumers and
hoteliers alike – to the disproportionate
benefit of the intermediaries. Pressure selling: whether claims about how
many people are looking at the same
room, how many rooms may be left, or
how long a price is available, create a
false impression of room availability or
rush customers into making a booking
decision.
But could we have reached ‘peak OTA’?
The European Commission is looking at
new restrictions on such ‘online platforms’,
and last month (28th June), the UK
competition regulator, the CMA, launched
‘enforcement action against a number of
hotel booking sites’ (OTAs) that it believes
‘may be breaking consumer protection law’. Hidden charges: the extent to which sites
include all costs in the price they first
show customers or whether people are
later faced with unexpected fees, such
as taxes or booking fees.
As part of its ongoing investigation
launched last October, the Competition and
Markets Authority (CMA) has identified
widespread concerns, including:
Discount claims: whether the discount
claims made on sites offer a fair
comparison for customers. For example,
the claim could be based on a higher price
that was only available for a brief period
or not relevant to the customer’s search
criteria, such as comparing a higher
weekend room rate with the weekday
rate for which the customer has searched.
The CMA will be requiring the sites to take
action to address its concerns, where they are
believed to be breaking consumer protection
law. It can either secure legally binding
commitments from those involved to
change their business practices or, if
necessary, take them to court.