Hospitality Today Summer 2018 (#39) - Page 4

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.