B&B Blog

David Weston of the Bed & Breakfast Association 'fights the corner' for this £2 billion 'cottage industry'

Monday, 16 July 2018

European Commission finds Airbnb's terms & condistions illegal, and orders it to change them

The European Commission today announced that Airbnb has been found in breach of EU consumer law on many counts – primarily for lack of price transparency as well as other unfair commercial practices. The decision will require changes to Airbnb’s business model and its "unfair" terms and conditions.

This is a very significant step, as such an action is rare and involves coordination of all 28 EU Member States (and Norway and Iceland) via what is called the Consumer Protection Cooperation Network (CPCN).

To comply with EU law, Airbnb will now have to denote on their site whether the ‘host’ is a commercial operator or an individual, present final prices upfront (ie inclusive of taxes and additional service fees etc), and change their host’s ability to cancel services at the last minute without having to indemnify the consumer. The EU's demands also free up the consumer to sue a host who has caused them harm, thus increasing the responsibility of the host (which has up to now been limited by Airbnb's terms and conditions). The full list of unlawful practices they engage in are extensive and are detailed officially here.

Airbnb now has until August to amend its business practices to ensure compliance, or potentially face a fine.

The European Commissioner for Justice and Consumers said: "More and more consumers book their holiday accommodation online and this sector has brought many new opportunities to holidaymakers. But popularity cannot be an excuse for not complying with EU consumer rules. Consumers must easily understand what for and how much they are expected to pay for the services, and have fair rules - e.g. on cancellation of the accommodation by the owner. I expect Airbnb to follow up swiftly with the right solutions.”

David Weston of the Bed & Breakfast Association said: "We are delighted that the European Commission has taken such strong and bold action today to protect EU consumers from Airbnb's unfair contract terms, its misleading pricing, and its illegal denial of their hosts' responsibility for their guests' safety. This will help move slightly closer to levelling the playing-field with B&Bs and small hotels".

Thursday, 12 July 2018

Toprooms.com reduces commission to 5% to attract B&Bs and independent hotels

As part of their on-going support for the B&B sector, booking software supplier eviivo are reducing the commission on their exclusive toprooms.com website from 15% to just 5%.

Unlike regular booking sites, toprooms.com doesn’t feature big corporate hotels and budget chains.  Instead it lists thousands of independent hotels, B&Bs, pubs with rooms, cottages and apartments across the UK, making it the perfect website for travellers looking to book authentic and characterful properties with a story to tell.

From now, any booking on the site will attract the new, lower rate, which is intended to help properties make the most of what is looking to be a fine summer season.  The 5% commission is reinvested in its entirety to advertise the site and generate bookings for the community of eviivo users.

A further change will also see eviivo users able to take advantage of bookings via the eviivo Co-op channel, entirely commission free. This unique referral service allows properties in the eviivo community to receive referrals from other eviivo properties in their area when they are full, and vice-versa.

To find out more about the eviivo community or to book a demo visit eviivo.com or call 0800 422 0088


Thursday, 28 June 2018

CMA Announce “Enforcement Action” against Online Travel Agencies

Competition regulator acts after B&B Association’s five formal complaints last July

The CMA today launched “enforcement action against a number of hotel booking sites” that it believes “may be breaking consumer protection law”.
As part of its ongoing investigation launched last October, the Competition and Markets Authority (CMA) has identified widespread concerns, including:
Search results: how hotels are ranked,
for example to what extent search results are influenced by factors that may not be 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, such as 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 will be requiring the sites to take action to address its concerns, where they are believed to be breaking consumer protection law. It can either secure legally binding commitments from those involved to change their business practices or, if necessary, take them to court.
Andrea Coscelli, Chief Executive of the CMA, said: 
“Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them. Holidaymakers must feel sure they’re getting the deal they expected, whether that’s securing the discount promised or receiving reliable information about availability of rooms. It’s also important that no one feels pressured by misleading statements into making a booking.
“That’s why we’re now demanding that sites think again about how they’re presenting information to their customers and make sure they’re complying with the law. Our next step is to take any necessary action – including through the courts if needed – to ensure people get a fair deal.”
The CMA’s investigation was launched in October, and covers concerns raised by the Bed & Breakfast Association to the CMA last July and in a meeting with CMA officials in September.
David Weston, Chairman of the B&B Association, says: “The Bed & Breakfast Association are absolutely delighted that the UK competition regulator, the CMA, has today announced “enforcement action” against Online Travel Agencies (OTAs) that it believes are breaking consumer protection law. The areas covered are those we raised in our five formal complaints to the CMA last July - ie false “discounts”, false availability claims and other “pressure selling” techniques, manipulated search rankings influenced by payments to the OTAs, and false “Best Price” guarantees. The CMA’s very welcome action will help move the balance of power a little from these global tech giants – who are after all only intermediaries - back towards the small businesses that actually own the accommodation booked, and provide the hospitality.”
In addition to its enforcement activity, the CMA has sent warning letters to a range of sites, demanding they review their terms and practices to make sure they are fair and comply with consumer protection law.
It is also referring a number of concerns around online hotel booking sites’ price guarantees and other price promises to the Advertising Standards Authority (ASA). The CMA has asked the ASA to consider whether statements like ‘best price guarantee’ or ‘lowest price’ mislead customers and what conditions must be met for companies to make such claims.
The CMA continues to assess the evidence it has gathered on the practices of other online hotel booking sites and could launch further enforcement cases in due course.
Anyone wishing to provide further evidence on the issues being considered can do so at: https://www.gov.uk/cma-cases/online-hotel-booking

Thursday, 3 May 2018

EU proposes new rules to combat the "unfair" practices of OTAs and search engines

The European Commission has this month proposed new rules to combat “unfair trading practices” by online platforms including online travel agents (OTAs) and search engines including Google.

The Commission said hotels, B&Bs and guest houses would be among those to benefit from the rules aimed at creating “a fair, predictable, sustainable and trusted business environment” online.

The proposals provide for “increased transparency”, the introduction of dispute resolution schemes – including a right for trade associations to bring court proceedings – and the establishment of an EU body to monitor the effectiveness of the measures.

“Providers of online intermediation” including Booking.com, Expedia, Google, Facebook and others will be required to publish policies detailing:
  • “How they treat their own goods and services compared to those used by professional users"; and
  • “How they use contract clauses to demand the most-favourable range or price of products and services.”
They will also be required to “set out the general criteria that determine how goods and services are ranked in search results”. (The B&B Association gave evidence to the EU and CMA of how OTA search rankings of B&Bs and hotels are misleading and manipulated.)

They would also have to give “reasonable minimum notice” of changes to terms and conditions. This proposal would prevent abuses such as the minimal notice recently given by one big OTA to B&Bs and hotels about its change of treatment (in the OTA's favour) of commission on cancellations, for instance.

Explaining the new rules, the Commission said: “The current position of online platforms as mediators of business - customer relationships allows them to engage in unfair trading practices that can cause significant economic harm to the businesses that use them.”

Elżbieta Bieńkowska, EU commissioner for the internal market, industry, entrepreneurship and SMEs, said: “[This] approach will give EU businesses the transparency and redress mechanisms that will help them embrace the digital economy.”

Mariya Gabriel, commissioner for the digital economy and society, added: “Platforms and search engines are important channels for European businesses to reach consumers, but we must make sure they are not abusing their power.”

David Weston, chairman of the Bed & Breakfast Association, said: "Although we have not yet been able to study the small print of these very detailed EU proposals, we are delighted that they do seem to be going in the right direction.

"Having held a number of meetings with MEPs and officials in Brussels over the last two years to explain our members' concerns, we are pleased to see that the Commission seem to have understood that the online platforms have been abusing their market dominance, and that the balance or power needs to be redressed in favour of small businesses, and in favour of honesty to the consumer too."

We will keep members informed of the progress of these draft regulations, which the Business, Enterprise, Innovation & Skills department (BEIS) told us last Friday are expected to be passed into UK law (after any revisions made during the consultation process) by the time the UK leaves the EU.

"The growth in short-term let market raises fire concerns" says BBC as Radio 5 Live investigates Airbnb

The growth of home-sharing rental properties is causing fire safety concerns, the National Fire Chiefs Council (NFCC) has told BBC Radio 5 live Investigates as part of a new BBC investigation into the lack of enforcement of rules on properties on Airbnb and similar websites.

Tourism industry leaders told the BBC that a "Grenfell-style incident" could happen unless inspections were enforced. The all-party tourism group of MPs has called for all properties used for short-term lets to be registered.

An NFCC spokesperson said fire and rescue services are "not aware" of how many short-term rental properties are operating in local areas, making it "very difficult" to assess potential risk.

They added: "Without this knowledge of properties essentially operating as a bed and breakfast or hotel, it is almost impossible to carry out an inspection or give owners relevant advice to ensure their buildings are safe."

Fire safety law applies to all properties in which people are paying to stay - even one room, for one night. The rules are enforced by visits to hotels and B&Bs, but fire authorities are not visiting, checking or inspecting similar properties on sites like Airbnb (who have over 168,000 in the UK), unless they have received a specific fire safety complaint.

In 2017, a flat rented out on Airbnb in Plymouth was called a "deathtrap" after a fire inspection (following a complaint) discovered it had toxic tiles, faulty locks and a fire extinguisher that had not been tested for more than 15 years. The owner was given a six-month suspended sentence.

Kate Nicholls of UK Hospitality said there was a large volume of evidence suggesting that commercial landlords were using online home-sharing sites to rent out large properties all year round: "We are potentially risking a Grenfell-type tragedy that would be disastrous for families and further damage our reputation as a safe, attractive tourist destination."

In March, MPs on the parliamentary group for tourism said "all businesses offering accommodation should compete on a level playing field" when it comes to regulation.
But the B&B Association told the BBC there was currently a "total and utter lack of enforcement" of safety regulations in the short-term lettings market.

As the BBC reported, our chairman David Weston said: "The authorities only inspect high-risk Airbnb style properties if someone complains, which is hugely unlikely, or if there is a fire."

David met the head of the Home Office fire safety unit and the heads of the National Fire Chiefs' Council on 13th April for talks about how the enforcement of fire safety rules can be applied to Airbnb properties in the same way as it currently only is to B&Bs.

The officials also agreed that the B&B Association would be invited to help review and replace the current Official Guidance (Do You Have Paying Guests?), after the Hackett Review reports on fire safety enforcement post-Grenfell.

Saturday, 16 July 2016

Guests rate B&Bs 8.8% higher than hotels

Above: the overall average guest ratings in 2015 of B&Bs (89.6%) and Hotels (80.8%)

British B&Bs are rated by guests 8.8% higher for quality than hotels, on average, according to new data just released. The study analysed millions of traveller ratings given to hotel and B&B properties on TripAdvisor, which is the world’s largest travel website with 340 million unique monthly visitors, and which lists 350 million reviews covering 6.5 million accommodations.

The study by TripAdvisor found that “smaller, independent accommodations in the UK were providing the biggest boost to the UK's overall average rating” - with B&Bs scoring an average review rating of 4.48 out of 5 (equivalent to 89.6%) compared to 4.04 (80.8%) for hotels in 2015.

Even within the hotel sector, smaller properties were shown to have a ratings advantage over larger properties, with UK hotels with fewer than 25 rooms scoring an average of 4.40 (88%) in 2015 compared to those with 26-100 rooms, where the average is 3.97 (79.4%).

"These figures are excellent news" commented David Weston, Chief Executive of the Bed & Breakfast Association, "Guests clearly love the individuality, character, home-cooked breakfasts and personal service that they get in British B&Bs, which is why - in millions of reviews on TripAdvisor - they score an 8.8% higher rating on average than hotels. These figures from TripAdvisor prove that B&Bs are the favourite accommodation in the UK based on guest satisfaction".

Monday, 6 July 2015

Booking & Expedia reinforce “rate parity” in the UK while France moves to ban it - will the CMA act in the UK?

There have been seismic moves in the ongoing saga of “rate parity” – whereby online travel agencies (OTAs) are preventing B&Bs and hotels from offering a lower price on their own websites to that offered via the OTA (who demands a commission of typically 15-23%). The B&B association and other bodies, including the British Hospitality Association (BHA) are strongly against OTAs being allowed to impose “rate parity” clauses on properties’ own website sales. However, OTAs are fighting this to the last, as their business model depends on being able to claim they offer the best available rates.

In Europe, OTAs and metasearch websites drive 70% of bookings (much higher than in the USA).

In April, Booking.com (in their words) “reached agreement with national competition regulators in France, Sweden and Italy, that Booking.com would drop price, availability and booking conditions parity provisions with respect to other OTAs”. This concession was made by Booking in order to retain their ability to impose price parity on hotels’ own websites.

On 25 June, Booking “decided to extend these commitments to all our accommodation partners throughout Europe from July 1”.

A Booking spokesman told the Association: “I respect that the Bed & Breakfast Association represents the views and interests of many B&Bs and guest houses in the UK, and by that virtue there will be a number of different opinions in relation to this decision. But I want to stress at Booking.com we remain resolute in our objectives in the UK:

·      “To bring transparency, choice and value to consumers;
·      “Help drive business for our accommodation partners; and
·      “Constantly innovate our platform to ensure that we are reaching the widest customer audience (helping our accommodation partners realise increasingly higher occupancy levels)”

Under the new provisions, Booking.com will abandon its price, availability and booking conditions parity provisions with respect to other OTAs, but will retain its “narrow MFNs” [“most favoured nation” clauses] for prices and booking conditions which will ensure hotels & B&Bs offer the same rates and booking conditions on Booking.com as they do through their own direct website.

With the implementation of the new parity provisions, Booking.com will continue its Best Price Guarantee and match any lower price that may be found on another booking website

Does the UK regulator accept the changes?
Booking said its June decision is “in line with its commitment to a new Europe-wide standard to keep competition healthy, driving value for consumers and hoteliers”, and stated that it “is a direct result of feedback from many European national competition authorities indicating that they would welcome Booking.com implementing the commitments in their jurisdiction”.

This seems to imply that the UK’s Competition & Markets Authority (CMA) may have tacitly nodded through the change (ie accepting OTAs ability to enforce “rate parity” here) – but the CMA has so far said nothing to support this, and the B&B Association and BHA are seeking clarification and stressing their opposition to rate parity, maintaining that OTA “rate parity” clauses increase prices for consumers, by forcing hotels and B&Bs to always charge their guests a price including commission (typically from 15-23%), even if the property is not paying that commission (eg where the guest books directly on the hotel’s website).

Jackie Grech, BHA Legal and Policy Director said: "With both German and now French governments setting precedents we encourage that UK regulators and government will take up the issue to put the power back into customers hands as they shop around online for the best deals.”

Many are questioning the CMA’s priorities, as it has seemed to be vehemently against a hotel setting the price of its own rooms sold via agents (which it calls “retail price maintenance”, and says is illegal), whilst seeming to be unconcerned by market-dominant global intermediaries preventing small B&Bs and hotels from lowering their prices to their direct customers. Yet the latter practice (OTA “rate parity” clauses) in effect builds in the OTA’s commission to every price paid by the consumer, even where the booking is not through the OTA.

Booking.com, with an eye on the European Commission, said its move meant “standard terms will be the same for all of its European partners – helping to build a single European digital economy”.  

“The commitments agreed with the French, Italian and Swedish [competition authorities] promote competition in a way that supports innovation and investment.  We think that all of our European partners and consumers booking at European hotels should benefit from the commitments… which is why we have decided to amend voluntarily our parity provisions right throughout Europe to be consistent with those commitments,” said Gillian Tans, President of Booking.com.  “We welcome and encourage fair competition and hope that our fellow online travel agencies follow Booking.com’s lead as part of a shared commitment to support best pricing for consumers.”

Booking.com added that it “trusts that these changes will set the tone for an industry wide solution”.

Expedia falls into line a month later
Sure enough, within days Expedia took up Booking’s invitation to follow its lead, and announced that from 1 August it will bring itself in line with the rate, conditions and availability parity clause commitments offered by Booking.com. It hopes that the move “will bring to an end further investigations into competition issues in Europe”.

“The changes announced apply to all hotel properties in Europe and affect consumers booking via Expedia’s sites worldwide.

Expedia echoed Booking in implying a measure of acceptance from European regulators, stating: “A number of European competition authorities are currently investigating rate, conditions and availability parity clauses in certain OTA agreements with hotels. Expedia has worked closely and constructively with these authorities and the European Commission and today announced that it is waiving its rate, conditions and availability parity clauses with its hotel partners for a period of five years in line with Clauses 1.1, 1.2 and 2.1 of the formal commitments offered by Booking.com and accepted by the national competition authorities in France, Italy and Sweden in April 2015.”

Expedia also echoed Booking in arguing that its move helped the EU’s digital market, saying: “The pan-European scope of Expedia’s announcement is also an important contribution to the European Commission’s Digital Single Market objective”.

It had to acknowledge, though, that individual countries (perhaps starting with France) can overturn rate parity, saying: “To the extent that individual countries’ regulatory or legislative developments may in the future cut across Expedia’s change of commercial policy announced today, Expedia naturally reserves the right to adjust its revised approach as appropriate”.

French parliament votes to kill rate parity in France
Meanwhile on 18 June, the French National Assembly moved to cancel rate parity clauses in contracts between hotels and online travel agencies (OTAs), in the “Macron Bill”.
Instead the legislation gives hotels a “mandate” contract where they will control all pricing and availability for all online reservation platforms and OTA’s sales channels.
The new French law would apply regardless of where the online booking platform is headquartered in the world.

Booking.com and other OTAs may challenge the law via the Constitutional Council. Otherwise hoteliers in France will soon be able to display on their online and offline channels lower rates than they offer to online booking channels. The parliamentary move particularly stung Booking.com, which commands two-thirds of the online market in France. The banning of rate parity would seem to negate the agreement reached six months ago between Booking.com and the French competition authority, which did not ban rate parity.
The French Hotels Association says the Bill will promote discounting of hotel rooms by ending price parity – echoing the stance of the BHA and B&B Association in the UK.

Some small OTAs doubt that even ending rate parity will level the playing field, given the market dominance of the biggest OTAs. Uwe Frers, owner of Berlin-based OTA Escapio, says: “Sometimes Escapio gets a rate for a hotel that is lower than what is available on Booking.com. When that happens, within about six hours, Booking.com calls the hotel demanding parity. Given that Booking.com has 50% market share in Germany, hotels listen and match the rate. That makes it harder for us to compete on price.” Frers said that he hopes that the European Commission ends rate parity because the practice is wrong. But he is sceptical that things will change for small OTAs as long as Booking has such enormous market power.

Price war or price inflation?
The OTAs seem to be sending contradictory messages as to whether ending rate parity would lead to lower or higher prices for consumers.

Carlo Olejiniczac, Booking.com’s regional manager for France, Spain & Portugal told French media that the end of rate parity might lead to an “exacerbated price war. Hoteliers are likely to suffer…. This will cause unbridled price pressure.”

However Christoph Klenner, secretary general of the European Technology and Travel Services Association describes it as “a licence for the hotels to increase prices”, saying “There will be no price competition if hotels determine all prices.
“Hotels will unfairly favour their own channels for the lowest pricing and availability, which will substantially reduce competition and consumer choice.
“It will lead to higher prices as there are no incentives for hotels to discount if they can eliminate all competition across distribution channels.”

It must be pointed out that OTAs are not trying to stop hotels from offering a higher price – their “rate parity” provisions are designed to prevent hotels from offering a lower price to consumers than the price through the OTA. B&B Association CEO David Weston took issue with Klenner’s statement, saying:
“Firstly, why is it “unfair” for a hotel or B&B to ‘favour their own channels for the lowest pricing’? – and secondly, why would allowing our members to use ‘their own channels for the lowest pricing’ lead to higher prices?
“The common-sense truth is, of course, that (as hotels and B&Bs everywhere say) if we had the freedom to sell direct without commission when we are not paying it, the consumer could pay a lower price for the same product. The OTAs could never admit that, though, as it would undermine their business model, which depends on their controlling the prices hotels & B&Bs charge, and preventing our discounting to our own customers.”

The B&B Association will continue its campaign for commercial freedom for B&Bs, and the right to offer guests a lower price via the B&B’s own website.

What do you think? Email us at comment@bandbassociation.org

UPDATE: Since the above was written, the Association has been assured by the CMA that it has not given any indication to Booking or Expedia that it would accept their new unilateral change of terms in the UK; the CMA also says it will be studying the market carefully as the new terms bed in, and looking at any evidence which might indicate whether OTA "price parity" clauses are increasing the price consumers pay. If the CMA were to be convinced that the workings of the market (with "price parity" imposed by OTAs on hotels) is anti-competitive and/or driving up consumer prices, it will take action.

The above article was originally published in the B&B Association's member magazine, B&B News (July-August issue); the Association wanted to make it more publicly available as part of our campaign against "rate parity" clauses which prevent B&Bs from reducing prices directly to their guests via their own websites.