Technology

UK competition watchdog to investigate hotel booking sites

Posted by Ben Ireland on
UK competition watchdog to investigate hotel booking sites

Hotel booking sites are to be investigated by the UK’s competition watchdog, which is “concerned” about the accuracy of information found on them.

The Competition and Markets Authority (CMA) will look into hidden charges, search results and discount claims.

Companies across the entire sector have been written to by the CMA, which is seeking information from websites, hotels and consumers. Leading sites include Expedia and trivago.

CMA chief executive Andrea Coscelli said: “Around 70% of people who shopped around for hotels last year used these sites and they should all be confident they have chosen the best accommodation for their needs and are getting a good deal.”

Such sites can save time and money, but information must be clear and accurate, he said.

“But we are concerned that this is not happening and that the information on sites may in fact be making it difficult for people to make the right choice.

“That’s why we have started our investigation into this sector – to get to the bottom of these issues, see whether sites are breaking consumer law and make sure they help, not hinder, people searching for their next hotel room,” Ms Coscelli said.

One of the issued to be explored will be whether the ranking of hotels in search results is linked to the commission hotels pay to the sites.

And the regulator wants more information on whether extra charges, such as taxes and booking fees, are displayed clearly and will be examining how sites display how many room are left at hotels which it fears can rush customers into making a booking decision.

The announcement of the investigation follows a year-long CMA probe into price comparison sites.

Abta said it welcomed the move.

A spokeswoman from the association added: “Abta has always advocated price transparency and the provision of accurate information for consumers so that they can make a properly informed choice when booking their travel arrangements.

“The law requires companies to include all non-optional charges in their headline price so that customers are not hit with unexpected charges. Our Code of Conduct reflects this and it is important that the same rules apply across the industry to ensure a fair and level playing field for all travel companies.”

Kristian Valk, co-founder and CEO of Hotelchamp said: “The CMA’s decision to investigate the accuracy of booking sites comes at a crucial time for the hotel industry. With hotels becoming increasingly dependent on these third-party booking websites, they are unable to compete directly with the sorts of strong-arm tactics the investigation hopes to uncover.

“With hotels having to pay higher and higher commision rates, it’s inevitable that they’re forced to pass these rising costs onto consumers simply to stay afloat.”

“This investigation is a real win not only for consumers, but also for the hotels that strive to provide them with legitimate value. By bringing more transparency to the industry, this will allow hoteliers to compete on a more level playing field – offering what is right for the guest, not the middleman.”

Ufi Ibrahim, the chief executive of the British Hospitality Association, added: “The BHA has had lengthy discussions with the CMA about consumer transparency and is  delighted that the CMA is now opening an investigation into the behaviour of online hotel booking sites.

“Many of our members have been concerned about the vast power of online booking agencies often charging high rates of commission, use of misleading information, pressure selling, and a lack of transparency.  In the process guests are paying more than they should for rooms. Contract terms also often include ‘narrow parity’ clauses, which restrict a hotel’s ability to offer a lower price on the hotel website than that offered to the online travel agent with which it has an agreement.”

Ibrahim warned that Expedia, which owns the hotels.com, Trivago and Travelocity brands, and Priceline Group, which is behind Booking.com, Kayak and Agoga, control 80% of the European market.

“This means that this is difficult for others to break into the market,” he added. “The BHA, in submissions to the CMA, has advocated for greater transparency from OTAs, citing increases in prices for consumers and misleading information by websites. Our objective is to not to hinder the growth of the online marketplace but to deliver a fair digital market.”

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