OTAs to end 'misleading' sales following CMA investigation

Amy Horsfield By Amy Horsfield
3 weeks ago | Updated 1 week ago

Several of the biggest OTAs have agreed to abide by guidelines from the UK's Competition and Markets Authority after being investigated over misleading sales practices.

In October 2017, we published a story about the launch of the Competition and Markets Authority's (CMA) investigation into hotel booking sites.

Expedia, Booking.com, Agoda, Hotels.com, Ebookers and Trivago have been investigated due to concerns around pressure selling, misleading discount claims, the effect that commission has on how hotels are ordered on sites and hidden charges.

The CMA has now reported its findings and the OTAs have agreed to make changes that include being transparent about how hotels are graded, no longer creating false impressions to rush customers into making a booking, and being clear about discounts to only promote deals that are available at the time. 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," said CMA chairman Andrew Tyrie. "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."

A spokesperson for Expedia said in a 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."

Reacting to the news, Kristian Valk, Hotelchamp CEO, said: "It cannot be overstated how important this news is for hoteliers. Regardless of how voluntary these changes are, and the technical legality that has been their catalyst, it is a clear indication that hoteliers, and ultimately their guests, have been exploited. Illegal or not, these OTA practices have certainly not been fair. Since the CMA began their investigation, we have seen hotels embrace the concept of personalisation to try to fairly represent their property and offering to each and every potential guest. We are excited to see how this transparent and more level playing field further enables hoteliers to thrive in the online booking space, instead of being ransomed by OTAs just to survive. Hotels are now truly free to offer what is best for their guest - not the middle man."

Matt West, CEO, Feefo, added: "This is a really positive move by many of these booking websites who have agreed to follow a new code and be more transparent about their sales practices, with their valued customers. Last year GDPR put the power back in the hands of the consumer making them more aware of who has access to their data and how they use it. In the wake of this, consumer trust and brand loyalty has never been more important. Customer experience should be at the forefront of every successful business today. Brands that fail to deepen their understanding and relations with customers risk losing them."

The companies have until September 1, 2019 to comply. Those who fail to comply with the demands could be taken to court.

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