Travel agents

Hotel chains face court action in US over ‘anti-competitive’ Google keyword deals

Posted by Ben Ireland on
Hotel chains face court action in US over ‘anti-competitive’ Google keyword deals

Six major hotel chains face a class action from a guest over claims they entered into an illegal agreement to eliminate their rivals and leading OTAs from search results.

Hilton, Hyatt, Marriott, Choice, IHG and Wyndham are being sued by Karen Tichy of Clarksville, Virginia, in the US.

Tichy says she searched for hotels on Google using the defendants’ “branded keywords” and noticed “fewer competitive options being presented”.

She says this led to her increasingly just visiting the Marriott site directly “to save time” but ended up paying higher prices than she would have found elsewhere.

The lawsuit claims the hotels reached an agreement in 2015 to not compete in the online marketplace which it says created an illegal scheme that prevents online travel agencies such as Expedia and Booking Holdings bidding on their keywords.

It also accuses the hotel brands of sending “cease-and-desist letters” to affiliate OTAs, such as Expedia and Booking Holdings “to prevent those affiliate OTAs from engaging in branded keyword search advertising”.

The class action says the six hotel chains control 60% of hotel room inventory in the US. All of them are international brands.

Tichy, who is represented by attorney Steve Berman of Hagens Berman in Seattle, alleges that the brands will have cost millions of hotel shoppers billions of dollars collectively.

“The effect of these agreements was to impair competition, resulting in direct harm to consumers in interfering with the free flow of information from sellers to buyers, raising the costs to consumers of finding the most suitable offering, increasing transaction prices, and raising the price of hotel rooms sold online by reducing the downward pricing pressure exerted by OTAs and each other.

“As a result of the illegal agreements, plaintiff and the class have been damaged by paying more for hotel rooms than they otherwise would in the absence of the agreements, and by incurring search and transaction costs higher than they would in the absence of the agreements,” the lawsuit alleges.

Hyatt, Hilton and Choice all said they do not comment on pending litigation, while an Intercontinental Hotels Group spokeswoman said: “We are reviewing the filing received, and we will respond to any allegations through the appropriate judicial process.”

Travolution has contacted Marriott and Wyndham and is awaiting a response.

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