Commission secures 5-year commitments from Booking.com

October 6, 2015

 

  • Accommodation providers in Ireland will have increased ability to offer lower prices
  • Consumers will have greater access to more competitive rates

 

Tuesday, 6th October 2015: The Competition and Consumer Protection Commission (“the Commission”) has today published details of commitments it has secured from Europe’s largest online travel agent platform, Booking.com. The commitments will allow accommodation providers[1] in Ireland to offer cheaper rates through different online travel agents and to consumers who contact them directly for example, by email, over the phone, face to face or via the “members only” section of their websites. This action was taken by the Commission to address concerns regarding pricing and availability obligations which Booking.com had placed on hotels in Ireland.

Chairperson of the Commission Isolde Goggin said “The commitments secured from Booking.com will enable increased competition amongst businesses operating in this sector, benefitting the businesses concerned and also consumers.  The Commission’s mission is to make markets work better for both consumers and businesses and removing barriers to competition is an important part of this work.”

Online travel agents (OTAs) such as Booking.com enable consumers on one website, to search for, compare and book rooms in a variety of hotels.  Following an investigation, the Commission formed the view that some aspects of the arrangements Booking.com had with Irish hotels restricted price competition and risked infringing both Irish and EU competition law.

Specifically, Booking.com offered a “Best Price Guarantee”, whereby it guaranteed to match lower rates for the same room found elsewhere. While this may seem like a good deal for consumers, it was underpinned by a “Price Parity” agreement which prevented hotels hosted by Booking.com on its site from offering lower prices via other online travel agents, other marketing channels or directly to consumers. Thus the “Best Price Guarantee” meant that the lowest price available to consumers was based, not on open competition across different channels, but on an underlying agreement not to undercut the Booking.com price.

Following the Commission’s intervention, hotels in Ireland are now free to enter into alternative pricing arrangements with different OTAs, thereby facilitating price competition.  Hotels will also be able to offer cheaper prices through other marketing channels, for example loyalty clubs and through direct contact with consumers who call, email or drop in.

Advising consumers Isolde Goggin said “Consumers may believe that using one travel website will guarantee them the cheapest rate but this is not always the case. As well as checking the cost of accommodation on a travel site, it is also worthwhile contacting the hotel directly to see if you can secure a better deal.”

The Commission’s action has occurred alongside a number of investigations across Europe by other authorities. Ireland joins France, Sweden and Italy in securing commitments from Booking.com. The commitments which the Commission has secured apply to the relevant terms and conditions between Booking.com and hotels in Ireland for the next five years.

 

Notes to the Editor

Price Parity

Booking.com offers consumers a ‘Best Price Guarantee’, whereby it guarantees to match lower rates for the same room found elsewhere. Until the Commission’s intervention, this Guarantee was underpinned by a ‘Price Parity Clause’, which required hotels to guarantee that they would make their best rates available to Booking.com, and that cheaper rates could not be found elsewhere. Where a consumer found a cheaper rate elsewhere than on Booking.com, the hotel was obliged to fund the cost of the Best Price Guarantee (i.e. the difference between the cheaper rate and the Booking.com rate).

Price parity clauses restrict competition by dissuading market entry by new, low-cost online travel agents (OTAs), by preventing hotels from discounting rooms which would otherwise lie empty (e.g. offering a cut-price room in response to a last-minute booking enquiry) and by dampening price competition between OTAs (because where multiple OTAs invoke price parity clauses, a hotel can only satisfy all these clauses by offering the same price on every OTA). Booking.com may continue to offer a ‘Best Price Guarantee’, however, it must now fund the cost of any claims under the Best Price Guarantee itself, rather than obliging the hotel to fund the cost.

The Competition and Consumer Protection Commission

The Competition and Consumer Protection Commission was formed on 31 October 2014 following the amalgamation of the Competition Authority and the National Consumer Agency. On that day the Competition and Consumer Protection Act 2014 came in to force. The Commission has a mandate to enforce competition and consumer protection law and we work to: protect and strengthen competition, empower consumers to make informed decisions and protect them from harmful business practices.

[1] Referred to as ‘hotels’ from here

 

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