Marketing

Hotel booking websites face CMA enforcement action

Posted by Lee Hayhurst on
Hotel booking websites face CMA enforcement action

Hotel booking sites face legal action for breaches of consumer protection law in a clampdown by the UK competition regulator.

The Competition and Markets Authority is launching enforcement action against a number of unnamed hotel booking websites as part of an ongoing investigation started last October.

The unspecified number of websites are being asked to take action to address the CMA’s concerns, where they are believed to be breaking consumer protection law.

It can either secure legally binding commitments from those involved to change their business practices or take them to court.

The CMA has identified “widespread concerns”.

These include:

• Search results: how hotels are ranked, for example to what extent search results are influenced by factors that may not be relevant to the customer’s requirements, such as the amount of commission a hotel pays the site.

• Pressure selling: whether claims about how many people are looking at the same room, how many rooms may be left, or how long a price is available, create a false impression of room availability or rush customers into making a booking decision.

• Discount claims: whether the discount claims made on sites offer a fair comparison for customers. For example, the claim could be based on a higher price that was only available for a brief period or not relevant to the customer’s search criteria, such as comparing a higher weekend room rate with the weekday rate for which the customer has searched.

• Hidden charges: the extent to which sites include all costs in the price they first show customers or whether people are later faced with unexpected fees, such as taxes or booking fees.

CMA chief executive Andrea Coscelli 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.”

Warning letters have also been sent 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 is 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.

The CMA added that it “continues to assess the evidence it has gathered on the practices of other online hotel booking sites and could launch further enforcement cases in due course”.

Kate Nicholls, chief executive of UK Hospitality which represents hoteliers, welcomed the CMA’s announcement saying it would bring “reassurance” for customers.

“The CMA clearly intends to ensure that online booking sites are transparent and accurate, and that customers have complete peace of mind when booking,” she told the BBC.

Direct booking platform Triptease, which is hosting a Direct Booking Summit in Amsterdam this week, said OTAs use various tactics to create a “flase-impression” they are the cheapest way to book.

Chief Operating Officer James Osmond said: “Tactics such as false discounting and highly-pressured ‘urgency messaging’ create a stressful experience for guests which often prevents them from truly finding the best deal.

“In the majority of cases, the direct hotel website will have both the best price and the most flexible options for booking, plus additional benefits for guests. However, the vast market share and marketing budgets held by the largest OTAs has created a false impression among most consumers that intermediaries are the cheapest and most flexible option.”

But a spokesman for leading OTA Expedia said: “We are aware of the announcement from the CMA today. Expedia Group continuously aims to deliver the best travel options at affordable prices in transparent, clear and easy to understand ways, so that our customers have all the information they need to make informed travel choices. Expedia will continue to engage with the CMA on these consumer matters, as it continues its inquiries in the travel sector.”

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