On 27 October 2017, the UK’s Competition and Markets Authority (CMA) announced that it had launched investigations into several hotel booking websites on the grounds that they were potentially misleading consumers. Specifically, the CMA had concerns regarding:
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the manipulation of search results once a consumer had entered their hotel search criteria, particularly hotels who paid more commission to the website being ranked higher;
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creating false impressions as to room availability to rush consumer decision making;
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advertising misleading discounts that may not be based on like for like criteria; and
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hidden taxes and booking fees not disclosed with the initial advertised price.
The investigation follows a year long market study by the CMA into online comparison tools. That study educated the CMA in industry practices and led to ground rules in presenting information to consumers.
The current investigations are being bought under the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015. Both the statutes create offences for misleading consumers and stipulate transparency and fairness in contractual terms.
The CMA has for four years or more had an intense interest in the hotel booking industry and comparison websites in general. Previous investigations and enforcement actions focused on price parity clauses where the hotels were not able to offer lower prices than those found on the comparison sites, leading to a lack of competition in the market and higher prices for consumers. Although price parity clauses have been investigated and enforcement action taken in hotel booking and car insurance, the CMA now seems to feel that there is more to do and consumers are still getting a raw deal.
Interestingly, the move by the CMA has largely been welcomed by the hotel industry which is critical of the market power of the comparison websites. Hotels often lose 15% of the booking price through the commission fee of the comparison site, and some pay more for more prominent online placement, the very practice mentioned above that the CMA wish to eradicate.
The CMA has called for input from both accommodation providers and consumers by 15 December 2017. Please follow this link for further information.
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