Hotel booking sites to make major changes after CMA probe

, , Comments Off on Hotel booking sites to make major changes after CMA probe

Expedia, Booking.com, Agoda, Hotels.com, ebookers and trivago have been the subject of CMA enforcement action due to serious concerns around issues like pressure selling, misleading discount claims, the effect that commission has on how hotels are ordered on sites, and hidden charges.

The Competition and Markets Authority (CMA) took action last year because it was concerned that practices such as 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.

All companies under investigation by the CMA have co-operated with its work and voluntarily agreed to the following:

Search results: making it clearer how hotels are ranked after a customer has entered their search requirements, for example telling people when search results have been affected by the amount of commission a hotel pays the site.

Pressure selling: not giving a false impression of the availability or popularity of a hotel or rushing customers into making a booking decision based on incomplete information. For example, when highlighting that other customers are looking at the same hotel as you, making it clear they may be searching for different dates. The CMA also saw examples of some sites strategically placing sold out hotels within search results to put pressure on people to book more quickly. Sites have now committed not to do this.

Discount claims: being clearer about discounts and only promoting deals that are actually available at that time. Examples of misleading discount claims may include comparisons with a higher price that was not relevant to the customer’s search criteria. For example, some sites were comparing a higher weekend room rate with a weekday rate or comparing the price of a luxury suite with a standard room.

Hidden charges: displaying all compulsory charges such as taxes, booking or resort fees in the headline price. Sites can still break that price down, but the total amount the customer has to pay should always be shown upfront.

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.

6 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.

Not all firms engaged in all of the practices cited above, but all have nonetheless agreed to abide by all the principles set out in the undertakings.

Although welcoming the response, Expedia made the following points:

We 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.  We continue to believe our practices did not breach any consumer laws. That said, we are surprised and disappointed in the CMA’s description of our partnership with them in the CMA’s press announcement, which we believe 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.  We are however pleased the CMA has been clear that it views this new standard as one applicable to all participants in the industry, whether online travel agents, search engines and metasearch sites or the direct sites of accommodation providers.

As we always look for better ways to serve our customers and the broader travel community, we are proud to have been part of this new industry standard which supports UK customers with their online booking journey. We hope and expect that the CMA will ensure that all platforms which offer UK consumers the ability to search and/or book any type of accommodation will adopt this industry standard to the benefit of all UK consumers.

Booking.com also welcomed the report, and emphasised their response to the findings:

We are pleased that the CMA has closed its investigation, without finding admission of infringement on behalf of Booking.com. We are constantly optimizing the consumer experience on our website and mobile apps in an ongoing effort to deliver a best-in-class experience for our customers.  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 CMA 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 UK.

The CMA will now monitor compliance with the commitments made by the booking sites. All changes must be made by 1 September at the very latest, though the sites have already started making improvements.

It will also write to other hotel booking sites including online travel agents, metasearch engines and hotel chains setting out clear expectations for how they should be complying with consumer protection law. The CMA also expects these sites to make necessary changes by 1 September. If it finds sufficient evidence that others could be breaking consumer protection law, it will consider taking further enforcement action.

Revision History: