Hotel booking websites face investigation into selling practices
Are hotel booking websites misleading travellers, preventing them finding the best deals and breaking consumer law? The Competition and Markets Authority (CMA) has launched an investigation to find out.
The CMA says it is concerned about the “clarity, accuracy and presentation of information” on sites such as Booking.com and Expedia (which owns Hotels.com, Agoda and the comparison website Trivago).
The investigation will focus on four aspects of the market.
The first is the way that results are displayed once a traveller searches for a particular location. It will look at “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”.
The basic commission level is generally around 15 per cent, but hotels can pay extra for more “visibility” — in other words given a higher profile in the results. Booking.com tells hoteliers: “We’ll provide an estimate of the predicted increase in page views that you can expect for the additional commission.”
Next, the CMA will look at what it calls “pressure selling” — whether claims about how many people are looking at the same room, how many rooms are left, or how long a price will be available, create a false impression of room availability or rush customers into making a booking decision.
To give the message “In high demand!” and “Last minute price drop” for the same property may be seen as mutually contradictory.
The CMA is also looking into claims made about discounts. It says: “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, e.g. comparing a higher weekend room rate with the weekday rate for which the customer has searched.”
Finally, it will study 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.”
All rates quoted in the UK should include VAT, the only relevant tax, but an Independent reader, Robert Jones, was charged an additional 8.3 per cent as a “city tax” on a room in a rural Dorset hotel bought through Booking.com.
He was told by a Booking.com customer service representative: “The city tax depends on the council; some of them they apply and some not even in UK. As per your confirmation email this property apply the city tax as per government decision.”
Ufi Ibrahim, the chief executive of the British Hospitality Association, said her organisation has advocated greater transparency from online travel agencies. "Our objective is to not to hinder the growth of the online marketplace but to deliver a fair digital market," she said.
Booking.com’s rival, Expedia, yesterday pledged to become “much more customer centric”. The chief executive, Mark Okerstrom, told analysts: “With the digital age, we made researching and booking travel exponentially better, but we still have a long way to go in truly alleviating customer pain points.”
