Online hotel retailing was accused of continuing to indulge in practices such as pressure selling, after having committed to the Competitions and Markets Authority that they would reform their dealings.
The websites were also accused of advertising rooms without including additional fees, with Which? reporting their activities.
The deadline to implement changes required by undertakings and sector wide compliance was on 1 September.
Which? said that a study of its members found that 44% would be influenced to book by pressure tactics such as ‘one room left at this price’. The consumer group highlighted listings where this claim was false, such as Booking.com advertising ‘the last’ double room with private external bathroom at the Balmore Guest House in Edinburgh, Which? claimed there were another seven doubles available with ensuites at the same price.
Which? also claimed Agoda used unclear pricing. When its researchers checked in February, it was advertising a room at the Grand Hyatt New York Hotel for GBP189 a night there was an additional GBP30 hotel tax and service fee that weren’t mentioned on the front page.
Rory Boland, Which? travel editor said: “These sites have been getting away with dodgy sales practices for years and while the regulator’s intervention is a positive step, millions of holidaymakers are still going to be duped this summer before any changes are made. You’re usually better off calling the hotel directly for the best rate anyway – even if it can’t beat the price it will usually offer an incentive, discount or even a bottle of champagne to sweeten the deal.”
Expedia Group said that it was working closely with the CMA and “gave commitments to the CMA on a voluntary basis and the CMA in turn closed its investigation in respect of the Expedia Group with no admission or finding of liability”.
In February the CMA gained the agreement of Expedia, Booking.com, Agoda, Hotels.com, ebookers and Trivago that they would not engage in practices including pressure selling. Expedia Group welcomed the new standards, highlighting the importance of them being applied across the sector, not only by the OTAs.
‘Unfair practices’ listed by the CMA included: misleading sales tactics, hidden charges, deceitful discount claims and the quality of search results. The CMA said that not all six named firms had engaged in all the practices.
Alongside increasing clarity on their hotel search rankings, all six sites named agreed to: eliminate aggressive pressure selling tactics (e.g. provide more information when telling customers that there are people looking at the same hotel as you and eliminate the appearance of booked-out hotels in search results); make discounts and promotions clearer by giving more details into how the discount was worked out. In some cases spotted by the CMA, the displayed discounts were irrelevant to the customer’s search criteria; display all previously hidden charges in the headline price.
CMA chairman, Andrew Tyrie, said: “The CMA has taken enforcement action to bring to an end misleading sales tactics, hidden charges and other practices in the online hotel booking market. These have been wholly unacceptable.
“Six websites have already given firm undertakings not to engage in these practices. They are some of the largest hotel booking sites. The CMA will now do whatever it can to ensure that the rest of the sector meets the same standards.”
As the CMA was coming to its conclusions, the Leibniz Centre for European Economic Research in Mannheim, alongside Télécom ParisTech and the Düsseldorf Institute for Competition Economics, published a report which seemed to point to platforms punishing hotels for listing their rooms more cheaply elsewhere.
In a continuation of the rate parity debate, the study found that if a hotel charged a lower price on a competing platform or on its own website, this resulted in a worse ranking of the hotel in the platform’s recommended search results. This held regardless of whether a country has price parity clauses or not.
The greater the price difference between competing platforms, the greater the effect on a hotel’s positioning in the platforms’ search results. As a consequence, hotels with lower prices on competing channels were less visible than those which did not undercut rates. This in turn had an influence on the pricing decision of hotels and could reduce price differentiation across all channels.
HA Perspective [by Katherine Doggrell]: Regular conference attendees will note that panels proclaiming the pure, unmitigated evil of the OTAs were often run alongside panels on How To Best Sell Your Hotel Room, where the terrible evil tactics of the OTAs were hailed not as ‘pressure’, but more as ‘how to get your guest over the line and into making a booking’.
While the CMA was quick to name those on its bad practice list, it has also been quick to point out that these standards are those which it expects the whole of the sector to live up to, not just the intermediaries.
But does it matter? Is an image of a well-chilled bottle of Diet Coke, dripping with condensation, putting any more pressure on the consumer than a ‘last chance at this price’? Online retail in its many forms is new (to the regulators at least) and there is temptation to punish that which you don’t understand. Which? noted that 44% of consumers would be influenced by these tactics – if they look in their real-world shopping baskets they might find it happens there too. Down with supermarkets!