A place in the sun: online hotel booking sites agree to modify sales practices
We wrote a blog in November 2017 detailing that the Competitions and Markets Authority (the "CMA") had launched an investigation into the sales practices of a number of large hotel booking sites. Further to that investigation and subsequent enforcement action in 2018, the CMA has announced this week that 6 hotel booking sites have voluntarily agreed to change their sales practices by 1 September 2019.
To recap, the main areas of concern investigated by the CMA were search results, pressure selling, misleading discount claims and hidden charges. They were concerned that "practices such as giving a false impression of a room’s popularity or not displaying the full cost of a room upfront could mislead people, stop them finding the best deal and potentially break consumer protection law".
Recognising the importance of giving consumers clear and accurate information to allow them to shop around for the best deal, the companies have agreed to the following changes in relation to these problem areas:
- Search results: disclosing the effects of money earned on search results by being clear and transparent where a hotel's ranking on the search results is pre-determined by commission paid by the accommodation provider to the booking site, including clearly labelling search results that are guaranteed to appear in a specific position and providing an explanation that commission earned by the booking site may affect the ranking of search results.
- Pressure selling: not creating false impressions about the popularity and availability of hotels and not making consumers feel pressured into making a booking. Sites often flag to consumers that others are looking at the same deal or have already booked the room. However, it is not always clear that they are looking at or have booked the room on different dates. The companies have agreed to stop such practices and be more transparent about a hotel's popularity on the website. They must provide context as to the time period to which the bookings relate. Websites must also be clear where a statement relates to different search criteria (e.g. destination, stay dates and room type). Statements as to the number of available rooms must be qualified so consumers are clear that availability may only be related to that particularly offer price, rather than the number of rooms available in the hotel. Time limited offers are also not permitted where an offer price will continue to be made available after the expiry period.
- Price comparisons and discount claims: not misleading consumers by making price comparisons for different circumstances (e.g. different dates; different tiers of rooms) and ensuring that price comparisons implying a discount are genuine and ensuring that all price comparisons are clearly presented. Where discounts are available, websites and accommodation providers must take steps to ensure that the standard rate price for the search criteria is genuinely available and allow the consumer access to such pricing details.
- Hidden charges: ensuring that headline prices (which incorporate any additional add-ons such as taxes and booking fees) are clearly displayed, so that the total price is provided to the consumer without any hidden charges. Whilst websites are still free to provide a break-down of the price, the total price must always be displayed alongside it. Where a consumer searches according to price, the price shown on the search results must be the total price (unless the consumer specifically requests otherwise).
6 companies (representing some of the largest hotel booking sites) have given undertakings to adopt these practices. The CMA will continue to monitor compliance with the undertakings. The undertakings contain requirements for the companies to report to the CMA in March 2020 to demonstrate implementation of the sales practices in the undertakings. The CMA expects that other operators in the sector such as online travel agents and hotel chains will also adopt the improvements in time for the 1 September 2019 compliance cut-off.
The websites are, however, proactively making improvements from now. This is good news for consumers who should start to see changes in time for the busy summer holiday season!
Other online hotel and travel sites should also take note and perhaps consider a website audit and changes to their commercial practices to ensure compliance with consumer laws as the CMA will also be contacting other hotel booking sites including online travel agents, metasearch engines and hotel chains setting their expectations for compliance with consumer protection laws.
For more information on these topics, please contact Sonal Patel Oliva or your usual contact within Fieldfisher's Brand Development Team.
Co-authored by Dominic Tyler.