A "victory" for travelers is the message from a regulator after it apparently won cooperation from a number of online travel agencies to "change their ways."
Booking.com and Expedia are the two major OTAs cited in a so-called enforcement action put in place to crack down on what is claimed to be pressure selling, misleading discount claims and the impact that commission rates might have on the ordering of search results on websites.
The ruling has come from the Competition and Markets Authority in the U.K. - a watchdog that, as well as scrutinizing other business practices, looks at consumer complaints covering the sales of goods and services online.
The outcome of the C.M.A.'s probe comes as a leading academic institution in Europe claims large hotel booking platforms are often giving inferior positions to hotels in search results if the property quotes a cheaper price on their own website.
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The U.K. regulator says it has been investigating since 2018 after it became concerned that OTAs were "giving a false impression of a room’s popularity or not displaying the full cost of a room upfront could mislead people, stop them finding the best deal and potentially break consumer protection law".
The other brands under scrutiny are Trivago (part-owned by Expedia Group), Ebookers and Hotels.com (both Expedia Group brands), plus Booking Holdings-owned Agoda, which operates mainly in Asia Pacific.
New efforts
As a result of the probe, each website has voluntarily agreed to a number of action items, the C.M.A. says.
- Make search results clearer so that how a hotel is ranked is explained to consumers.
- Not giving a false impression about availability of a hotel.
- Disclosing information about discounts and only promoting deals that are actually available.
- Displaying compulsory charges that can push the price of a room up further down the booking path.
The C.M.A. says it will monitor the activity of the six brands and strive to include other OTAs and intermediaries with similar guidance.
Expedia says it has a 20-year commitment to "putting travel data and details in the hands of consumers, knocking down barriers to searching, planning, and booking, all with the best interests of consumers in mind", with a goal of making the process easier for consumers,
This mission is core, it says in a statement, to what the company does on the named sites in the U.K.
An official continues: "That’s why over the past few months we have invested significant time and energy into working closely with the C.M.A. to create a helpful industry standard for all UK booking sites offering accommodation search and booking services."
That said, Expedia says it is "surprised and disappointed" in the statements made by the C.M.A., claiming that it "mischaracterizes the collaborative and good faith approach taken in establishing industry standards which are new and result in more transparency for consumers than in offline markets."
The OTA has not been found liable and the C.M.A. has closed its investigation, Expedia says.
Booking.com says it is "pleased that the C.M.A. has closed its investigation, without finding admission of infringement on behalf of Booking.com."
An official continues: "We test many iterations of content as part of this optimization process to ensure that the information displayed to users is relevant to their booking experience.
"In concluding our discussions with the C.M.A. we have agreed to test and implement new commitments, like pricing inclusive of all fees, to ensure we meet all standards for consumer transparency in the U.K."
Further scrutiny
The C.M.A. follows last week's announcement of a major study by the Center for European Economic Research (ZEW).
The 57-page research report claims that its analysis shows that hotel rankings are determined by the pricing that is made available to an OTA.
One in four rates are cheaper on a property's own own website but this has "consequences" for a hotel.
The report says: "The study shows for both online travel agents that if a hotel charges a lower price on a competing platform or on its own website, this results in a worse ranking of the hotel in the platform’s recommended search results. This holds regardless of whether a country has price parity clauses or not."
The greater the price difference between competing platforms, the study claims, "the greater the effect on a hotel’s positioning in the platforms’ search results."
"As a consequence, hotels with lower prices on competing channels are less visible than those who do not undercut rates. This in turn has an influence on the pricing decision of hotels and can reduce price differentiation across all channels."
In terms of what should be done by OTAs, similar to the C.M.A. disclosure this week, ZEW researcher Reinhold Kesler adds: "It would be desirable for online travel agents to better inform consumers about how they calculate their rankings labelled as ‘Recommended’ or ‘Our top picks’."
"Consumers could then make a more elaborate decision as to whether they want to actually follow the recommendation. This could in turn improve search quality for users and possibly also eliminate the anti-competitive effects of such platform strategies."
* The ZEW report - Hotel Rankings Of Online Travel Agencies, Channel Pricing and Consumer Protection - is available here.