The CMA said it believed a number of hotel booking sites were breaking consumer law with their selling tactics.
The comments came as Expedia launched a new product offering greater choice, but raising the ire of some tour operators.
The CMA identified a number of concerns, including whether commission affected rankings, whether pressure selling tactics were being used and whether discount claims made on sites offered a fair comparison for customers.
Andrea Coscelli, CEO, CMA, said: “Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them. Holidaymakers must feel sure they’re getting the deal they expected, whether that’s securing the discount promised or receiving reliable information about availability of rooms. It’s also important that no one feels pressured by misleading statements into making a booking.
“That’s why we’re now demanding that sites think again about how they’re presenting information to their customers and make sure they’re complying with the law. Our next step is to take any necessary action – including through the courts if needed – to ensure people get a fair deal.”
The CMA has sent warning letters to a range of sites, demanding they review their terms and practices to make sure they are fair and comply with consumer protection law. It was also referring a number of concerns around online hotel booking sites’ price guarantees and other price promises to the Advertising Standards Authority. The CMA has asked the ASA to consider whether statements like ‘best price guarantee’ or ‘lowest price’ mislead customers and what conditions must be met for companies to make such claims.
Expedia Group said that it aimed to offer options in “in transparent, clear and easy to understand ways,” adding that it would “continue to engage with the CMA on these consumer matters, as it continues its inquiries in the travel sector”.
The investigation was the third time that the CMA, formerly the Office of Fair Trading, has looked at the online selling of hotel rooms, with this latest probe launched last autumn.
UKHospitality CEO Kate Nicholls commented: “For consumers, the CMA’s announcement should bring some reassurance, which can not only be good news for hoteliers, too. We have been working tirelessly to highlight these practices, so are pleased to see the CMA take action.
“The CMA clearly intends to ensure that online booking sites are transparent and accurate, and that customers have complete peace of mind when booking. Extra reassurance for customers is welcome and that confidence should provide a boost for businesses.”
“The fees that OTAs charge hoteliers and B&Bs inevitably result in higher costs to the consumer – a premium of which many holidaymakers are not even aware. Consumers and accommodation providers would be better served by a wider review of the business to platform relationship, which is now overdue.
“The practices addressed here exposes yet another example of digital businesses stealing an unfair lead on honest, regulated operators whose first concern is to deliver good service to their customers.”
The operators also welcomed the news, with Angela Vickers, CEO, Apex Hotels, adding: “We are especially interested to hear the watchdog is looking into the prices which first show when consumers search and if these reflect the final cost.
“More and more people are choosing to make bookings online and it’s important that consumers are protected from misleading information. Hopefully this investigation will weed out any sites which are not playing fair or pulling the wool over customers’ eyes.
“In the meantime, I would encourage anyone with concerns to book direct with hotel reservations or the hotel website as we always put the customer first and our costs are transparent. Very often we can personalise the customer stay with additional perks.”
The news and reaction to it came as Expedia launched its latest product, Add-On Advantage, which allowed customers to take advantage of package savings without having to book all the elements at the same time.
Aaron Price, SVP, global marketing at Brand Expedia, said: “Packages are still a great way to save, but we recognise it isn’t always the easiest or most convenient way for travellers to book. A recent study shows more than 40% of people prefer to book their flight first. The launch of the Add-On Advantage is yet another example of how we are listening to our travellers and helping to bring their next trip within reach.
“People make an average of 43 searches before booking anything and getting the best price remains the top concern for people booking travel. No longer will they need to visit multiple sites to know they’re getting an unbeatable deal on accommodations simply because they booked a flight, car or package. Better yet, it takes away the pressure of planning and paying for everything up front.”
The launch came after new package holiday rules came in on 1 July, giving consumers protection when booking package holidays, but only when booked all elements are booked at the same time.
The Association of Independent Tour Operators said: “A true tour operator not only provides full financial protection, but also takes full responsibility for all aspects of its holidays and for the actions of its suppliers.
“Expedia has walked away from any such responsibility. There is nothing illegal about what they are doing but they are cynically encouraging the consumer, for no good reason, to lose out on all that gold-plated consumer protection. The average consumer won’t of course realise this until they need the missing protection. Expedia will save a lot of money, but is behaving in a very irresponsible way.”
Expedia responded: “We know from research and what we see on our site that a good deal of people want to book their flight or car first, then come back and book their accommodation at a later date. We see the Expedia Add-On Advantage as a bonus for people who require time and flexibility to book their trip.
“Our website footers and booking terms and conditions provide clear information to consumers on the level of protections that they have depending on the travel products that are booked.”
HA Perspective [by Katherine Doggrell]: Education, education, education, as Tony Blair used to say, and, while the former PM may have had issues educating himself about, say, weapons of mass destruction, it wouldn’t be the worse thing to have up on the boardroom wall.
The CMA is concerned that the consumer is being taken in by tactics such as ‘one room left’ on websites – and there have been fines for this behaviour in the past. The hotel sector is, of course, delighted with the criticisms piled on, ignoring the fact that several of them have used such moves
in their own direct campaigns.
Transparency is much to be wished. Everyone wants the price advertised to be the price paid. The book direct campaigns have pushed the message that going straight to the hotel brings with it the cheapest price and additional benefits such as loyalty points, but the sector fears that the OTAs and their marketing budgets have convinced the consumer that they are cheapest and most flexible.
Which brings us back to education. The public has been fully educated by the airlines and knows that buying flights at the last minute is very bad indeed, yet it also knows that, in hotels, this is where the bargains lie. Hotels, unlike airlines, remain mystified by yield management. Look at the issues around cancellations. Hilton used its Q1 results to announce plans for introduce a fully flexible rate higher than the previous Best Available Rate which president & CEO Chris Nassetta said would provide “added flexibility for those who want it and cost savings for those who don’t. We anticipate this new pricing model will reduce the number of last-minute cancellations and maximise the number of guest rooms available”.
One of the largest global operators, still fiddling with its pricing structures. And before Nassetta comes around to burn our house down, Hilton is one of the few taking positive action.
Given this confusion, it’s a good job for the sector that the OTAs know how to sell rooms.
Additional comment [by Andrew Sangster]: When it comes to calling for regulatory action, industry players need to be careful what they wish for. Were the CMA to outlaw claims such as “best available rate” or “best price guaranteed” unless you can substantiate them, which hotel company could honestly claim that this would be the case for its own website? Unless they have quit the wholesale market entirely, I bet none could.
Hoteliers seem to be wanting OTAs to be made less effective. In particular, the really smart conversion tactics that the leading sites use appear to niggle. But surely, you want the best retailers to be able to sell as effectively as possible? Tieing one-hand behind the OTAs’ backs is not good commercial sense.
All the previous investigations by the competition authorities in the UK have effectively reached the same conclusion on how hotel rooms are sold. The conclusion being: “it’s complicated”. It is hard to see how this time it will be different and most likely some vague new rules will be suggested but nothing will effectively be changed.
It gives a job to lawyers and lobbyists but does little to help the overall industry. The CMA investigation is not to be welcomed.