Game-changer?: Hotel booking sites ordered to rein in sales malpractices

by | Feb 6, 2019 | News

Following action by the UK’s consumer protection agency, the world’s largest online hotel booking sites — Expedia, Booking.com, Agoda, Hotels.com, ebookers and trivago — commit to conform to new industry standards by Sep 1

Sales practices of online travel agents (OTAs) worldwide will soon see major reform after landmark action by the United Kingdom’s consumer protection agency.

The Competition and Markets Authority (CMA) has conducted enforcement action on the world’s biggest hotel booking sites due to serious concerns surrounding issues such as pressure selling, misleading discount claims, hotel commissions, and hidden charges.

Six of the world’s largest hotel booking websites — namely Expedia, Booking.com, Agoda, Hotels.com, ebookers and trivago — have until September 1, 2019 to make the necessary changes in their operations or risk breaking consumer protection law and further enforcement action.

End to misleading advertising

In June 2018, CMA initiated an investigation into hotel booking sites practices such as giving a false impression of a room’s popularity or not displaying the full cost of a room upfront, which it rightly believed could mislead people, stop them finding the best deal and potentially break consumer protection law.

The UK authority reports that all companies under investigation co-operated with its work and voluntarily agreed to the following:

Search results: making it clearer how hotels are ranked after a customer has entered their search requirements. For example, telling people when search results have been affected by the amount of commission a hotel pays the site.

Pressure selling: not giving a false impression of the availability or popularity of a hotel or rushing customers into making a booking decision based on incomplete information. For example, when highlighting that other customers are looking at the same hotel as you, making it clear they may be searching for different dates. 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.

Discount claims: being clearer about discounts and only promoting deals that are actually available at that time. Examples of misleading discount claims may include comparisons with a higher price that was not relevant to the customer’s search criteria. 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.

Hidden charges: displaying all compulsory charges such as taxes, booking or resort fees in the headline price. Sites can still break that price down, but the total amount the customer has to pay should always be shown upfront.

Industry welcomes reforms

CMA Chairman Andrew Tyrie commented on the ruling: “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.”

“While 6 websites have already given firm undertakings not to engage in these practices, the CMA will now do whatever it can to ensure that the rest of the sector meets the same standards,” Tyrie added.

He underlined that not all firms engaged in all of the practices cited above, but all have nonetheless agreed to abide by all the principles set out in the undertakings.

The CMA will monitor compliance with the commitments made by the booking sites, which have agreed to implement necessary changes by Sep 1, 2019.

Several sites have reportedly already started making improvements.

The consumer protection body will also write to other hotel booking sites including OTAs, metasearch engines and hotel chains setting out clear expectations for how they should be complying with consumer protection law.

Commenting on the CMA’s outcome, co-founder and CEO of global technology provider to the hotel and hospitality industry Avvio, Frank Reeves, said: “We’re encouraged by the findings of the CMA and the agreement from the online booking sites to incorporate more transparent and clear information for customers so that they can make an informed choice about where and when they stay.”

“In such a thriving market offering so much choice, it’s vital that hotels which focus on personalisation, quality of service and the experience they offer guests, to not be disadvantaged by their representation in the major booking portals,” Reeves added.

“Customers deserve to be offered transparent, clear and helpful information to aid their booking decision and it should not be skewed unfairly by distracting and misleading sales practices,” he stated.

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