Expedia has been hit by a Paris court order to pay a Euro 367,000 ($484,000) fine for "misleading marketing practices".
The fine will go to the Synhorcat group, a long-time thorn in the side of Expedia. A further Euro 70,000 will be heading in the direction of two hoteliers who joined the action.
The ruling comes after the French national union of hoteliers, Synhorcat, and the two hotels, complained about Expedia and subsidiaries TripAdvisor and Hotels.com.
The action was later supported by the government and its Directorate General for Competition, Consumption and Repression of Fraud (DGCCRF), an intervention seen by some as unprecedented in France.
The alleged practices included:
- Using Tripadvisor reviews to redirect traffic to Expedia and Hotels.com and not a hotel's website.
- Displaying a hotel as "full on requested dates", when in fact rooms were available, and suggesting other nearby available properties having better commercial terms with Expedia.
- Incorrectly displaying hotel phone numbers so users could not call a hotel directly.
- Announcing special promotional rates when the final price was actually just a standard rate.
Claims regarding the redirecting of users from TripAdvisor sites to Expedia-owned booking sites were not upheld in the ruling.
The French press, inevitably, is all over the place about the "ethical victory" of "consumers and hotel industry" against ecommerce intermediaries.
While there is no doubt the courts have done their job into investigating , the ruling could open a serious debate about the degree of freedom for online intermediaries into selling travel inventory.
- As far an agent has negotiated and agreed net rates with the property, are they not free to set their own pricing?
- If the agency has negotiated and filled room allocations with a property, are they not free to sell whatever other inventory they have available?
- Should one OTA be forced to promote a property just because they are selling a nearby one?
One thing is sure, with Expedia hit for displaying misleading promotions, there must be many more nervous people at daily deal and private sales sites today.
NB: In an emailed statement, an Expedia official says:
"We have been working with the French General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) over recent months to clarify the commercial practices of our reservation websites and TripAdvisor.fr, in accordance with applicable standards and as part of our ongoing policy to improve our tools and services.
"The ruling acknowledges our efforts to ensure the information contained on its websites is as simple, accessible and comprehensible as possible and also that significant efforts have been made beyond our legal obligations to add further information regarding both phone numbers and their conditions and hotel availability displayed on FR.hotels.com and Expedia.fr.
"TripAdvisor has also duly made changes to the wording on tripadvisor.fr on pages where prices or availability are shown in cooperation with the investigation. We are pleased to hear that this ruling acknowledges that these changes make it clear to visitors to the TripAdvisor.fr site that price and availability information is coming from our booking partners.
"As part of our ongoing efforts to improve the experience for our customers, we have also made significant investments: we have set up an advanced training program for employees in the call-centres for our reservation sites; strengthened our service by the gathering and sharing of consumer opinions via call centres and through user testing in our user experience lab which has enables us to significantly and constantly improve the user-friendliness and design of our reservation websites, with simpler and more practical searches."