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