OFT ruling promises greater OTA price competition on hotels

The Office of Fair Trading today accepted formal commitments from Booking.com and Expedia together with InterContinental Hotels Group to enable online travel agents and hotels to offer discounts on room rates.

The commitments mean that all OTAs and hotels that deal with these three businesses will be able to offer discounts off headline room-only rates so long as customers:

  • sign up to the membership scheme of an OTA or hotel to be able to view specific discounts, and

  • make one undiscounted booking with the OTA or hotel in question to be eligible for future discounts.

The discounts offered by OTAs will be funded through their commission or margins.

The OFT investigation, launched in 2012, focused on competition concerns that Booking.com and Expedia each entered into separate agreements with IHG, the world’s largest hotel group, which restricted each OTA’s ability to discount the rates at which room-only hotel accommodation bookings are offered to consumers.

The OFT said the commitments address these concerns by allowing greater competition on price between OTAs, and also between OTAs and hotels.

They should also enable new online agents to enter the market or expand by offering attractive discounts, according to the OFT.

Ann Pope, senior director in the OFT’s services, infrastructure and public markets group, said: “The travel industry, fuelled by the internet, has seen significant changes in recent years, and we want to ensure those changes continue to work in consumers’ interests.

“That is why we are pleased to have secured this outcome which, by allowing OTAs and hotels to offer discounts, should increase competition and mean travellers across Europe can benefit from reductions on hotel accommodation throughout the UK.

“By shopping around, people can compare the different discounts offered by hotels and OTAs, and ensure they get the best deal.”

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