Online travel agents have been under scrutiny for 5 years now, and that looks set to continue.
The major online travel agents (OTAs), including booking.com and Expedia, used to include ‘price parity’ clauses in their agreements with hotels. These clauses allowed the OTA to offer its customers the best room rates for that hotel’s room, without being undercut by offers on the hotel’s own website or on another OTA. At first glance, this gives the customer the comfort they are getting the best available room rates from that OTA and avoids the need for them to shop around more widely. However, the concern of the competition authorities is that in fact it prevents the hotel from offering better pricing elsewhere.
The investigations, which started in early 2012, have led to over a dozen regulators investigating these pricing practices.
Booking.com and Expedia offered commitments to change their practices, removing ‘wide’ price parity but retaining ‘narrow’ price parity – in other words, allowing a hotel to offer better room rates through other OTAs but not through the hotel’s own website. A number of regulators closed their investigations on the basis of these commitments. But not all did. And some Member States where investigations were closed have nonetheless gone on to ban both wide and narrow price parity.
So the current position is somewhat confused.
Over the last few months, around 10 national regulators – including the UK Competition & Markets Authority – in partnership with the European Commission have been carrying out a joint monitoring project, examining how changes to room pricing terms have affected the online hotel booking sector.
The Commission and national regulators will now need to decide how to take this forward. Not a straightforward task, given all that has gone before.
Moves by Booking.com, Expedia and HRS to remove problematic pricing clauses from contracts with hoteliers will come under review next month when antitrust officials from across Europe gather in Brussels.