OFT investigates online hotel bookings

A probe into alleged price fixing in the online sale of hotel rooms has been instigated by the Office of Fair Trading.

The OFT is looking at suspected breaches of competition law following a complaint from discount website Skoosh.com. The investigation is believed to focus on allegations that there could be agreements and concerted practices resulting in fixed or minimum resale price.

“The OFT is conducting a formal investigation into suspected breaches of competition law in the hotel online booking sector and has written to a number of parties in the industry to request information,” an OFT statement said.

“The investigation is at a very early stage and the OFT will not be in a position to conclude whether it considers the law has been infringed until it has completed its investigation and assessed the available evidence.”

Skoosh.com claimed it was being put under pressure to offer rooms at a standard price. The practice of keeping prices at a pre-set level is known as “rate parity”.
It is designed to ensure that all companies sell hotel rooms at the same rate as the hotel offers on its own website.

But there are concerns that rate parity could breach revised European competition laws designed to encourage free trade online.

It was made illegal for suppliers to restrict distribution online or make a requirement that a distributor pays a higher purchase price for items sold via the internet.

Skoosh founder and director Dorian Harris said in a blog on the site: “Who benefits economically from rate parity? I don’t see how the hotel benefits.

“Why is it better for a hotel to have all distributors selling at the same rate? It might sound fair but is it practical? One price for all channels across the whole world sounds a bit broad brush to me.

“A hotel in the Loire Valley may want to offer a special deal just for Brits on their half term holidays to establish a foothold in this market but they can’t because, under the restriction of price parity, if they offer a deal in the UK they have to offer it to everyone else.”