UK Agency Addresses Misleading OTA Sales Tactics

Updated February 6, 2019 with statements from Expedia and Booking.com.

The UK’s Competition and Markets Authority (CMA) announced today it has taken action against Expedia, Booking.com, Agoda, Hotels.com, ebookers, and trivago to correct issues like pressure selling, misleading discount claims, the effect that commission has on how accommodations are ordered on sites, and hidden charges. Though not all six companies were found to have engaged in these practices, all voluntarily agreed to comply with the CMA’s transparency requirements.

“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,” CMA chairman Andrew Tyrie said in a statement. “Six 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.”

Although the authority uses the word “hotel,” a CMA representative confirmed with VRM Intel that the investigation and actions apply to all accommodations listed on the OTAs, including vacation and holiday rentals, independent B&Bs, serviced apartments, hostels, etc.

The CMA’s probe began in October 2017 following concerns that
the way the sites were ranking listings and the information they were – or weren’t
– displaying could mislead consumers and potentially be in violation of the UK’s
Consumer Protection from Unfair Trading Regulations 2008.

The investigation
examined four key practices, as specified in the case document:

• Search results: how hotels are ranked after a customer has entered their search requirements, for example to what extent search results are influenced by other factors that may be less 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, for example 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.

The CMA did not produce a finding on whether the sites breached the consumer protection law (only a court can do this), but as a result of its findings and the voluntary compliance of the six sites in question, the authority set forth the following standards for which it will monitor their compliance:

• The OTAs must make it clearer how hotels are ranked in search results and tell consumers when the results rankings have been affected by the amount of commission the hotel pays the site.
• The OTAs cannot give a false impression of the availability or popularity of a search result or otherwise rush consumers into booking decisions based on incomplete information. For example, if a site shows that other consumers are looking at the same hotel, they must make it clear that those consumers may be searching for different dates. According to its press release, “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.”
• The OTAs must be clearer about discounts and promote only deals that are available at that time, as well as use similar properties and price periods in comparisons. According to the release, “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.”
• The OTAs must display all mandatory charges, including taxes, booking fees, or resort fees in the headline price. They may show such charges individually in a price breakdown, but the total cost must be shown up front.

The six sites have until September 1 to comply. The CMA will also write to other major OTAs, meta-search engines, and hotel groups to warn that they must also meet the same standards. The full case can be read here.

A spokesperson for Expedia provided the following statement:

We have a two-decades’ old commitment to putting travel data and details in the hands of consumers, knocking down barriers to searching, planning, and booking, all with the best interests of consumers in mind – to make travel easier, more attainable, more accessible and more enjoyable. This mission is core to what we do on our Expedia, Hotels.com, and ebookers sites here in the UK. That’s why over the past few months we have invested significant time and energy into working closely with the CMA to create a helpful industry standard for all UK booking sites offering accommodation search and booking services.

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.

A spokesperson from Booking.com provided the following statement:

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. Many of the commitments named by the CMA are already in place for Booking, but we have agreed to test and implement new commitments, like pricing inclusive of all fees.