OFT probes Expedia and pals over hotel room price-fixing
May have broken EU competition law
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Expedia, Booking.com and InterContinential Hotels Group may have broken EU competition law by restricting the ability of travel agents to discount the prices of room-only hotel accommodation, thereby squeezing out their competition.
That’s according to an Office of Fair Trading statement of objections issued Tuesday that follows an OFT investigation opened in September 2010 into suspected breaches of competition law in the hotel online booking sector.
The OFT's finding’s are provisional and the websites and hotel chain have the opportunity to respond before the department delivers a final verdict.
In a statement, OFT chief executive Clive Maxwell said: “The OFT's provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law.”
The 2010 investigation was initiated following a complaint by Skoosh.com.
Skoosh had claimed the hotels it bought room bookings from were under pressure from other resellers to maintain minimum prices – a practice it said was called 'rate parity' among industry insiders. This meant no discounting, empty rooms and no price competition.
The OFT said that the alleged infringements are, by their nature, anti-competitive in that they could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers.
The department claimed the value for UK hotel rooms amounted to approximately £10.1bn in revenue in 2010.
COMMENTS
I wish
they'd look into these price comparison sites for hotel rooms too.
Laterooms etc, the advertise that their prices are the cheapest you'll find. Looked for a room on there and it was going for over £1000 for the weekend. It was actually the most expensive site.
Same with most other "compare hotel bookings" sites. I tend to use those, find hotels I like the look of, and then go to the hotels own site to get the best deal over the phone.
"Rate Parity" - what a joke!
Expedia owns TripAdvisor.
If you go to TripAdvisor you will find links to hotel sites scattered throughout their pages.
What TripAdvisor doesn't tell you is that most of these sister web sites have an incestuous relationship through their cookies.
You get one quote from Tripadvisor it offers to let you compare prices and the prices are all within a dollar or so of each other. Delete the cookies as you switch from one site to another and then you see some action!
Another way these outfits can rip you is by pricing individuals, i.e. per person, when the rooms are sold in the country as rooms. This means they can really increase their take.
Hotels.com and Hostels.com have another wrinkle. They accept your reservation and charge you a deposit. These 'deposits' are actually their commission for the booking activity - in other words the hotel or hostel sees squat of this money.
They simply send an e-mail off and say Mr. Smith is arriving on so and so date for three nights. The weakness is that the web site relies on the hotels to advise them if a room is available for the whole block of days. Unfortunately they often don't.
Another problem arises is when a customer arrives at the hotel and the front desk, live and in person with only one room available. The question is: does the hotel sell the room and get full price or pass on the live customer and hold for a maybe? Often the choice is for the live customer which means that if the Hotel.com reservation turns up there is no room available.
So Hotels.com complains to the hotel and they say: E-mail, what e-mail?
You would need a genealogy program to detail all the inter-relationships between travel companies, it is simply unbelievable.
And never use someone like Expedia for flights, they get a bonus for selling the left-over seats.
I'm not in travel as a business, but do yourselves a favour - use your local travel agent, at least you can scream at them when things go wrong.
The one time I used lastminute.com, it had the lowest prices - only for the deal to be 'sold out' when at the checkout. They did, however, rooms costing exactly the same as the other price comparison sites. This was suspiciously repeated regardless of what I asked for.
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