Government watchdog the Competition and Markets Authority (CMA) has begun an investigation into large hotel booking sites including Booking.com, Trivago and Expedia, after concerns were expressed over what it calls “the clarity, accuracy and presentation of information on sites.”
The investigation will comprise several areas of the operations of Online Travel Agents (OTAs). The invisible factors which influence the order of search results, accuracy of ‘pressure selling’ tactics such as notifications about the number of other consumers ‘interested’ in a room, claims over discounts and hidden charges will all come under scrutiny.
CMA Chief Executive Andrea Coscelli noted that around 70 percent of those who sought hotel room deals last year used online travel agents.
Dr Coscelli said: “Sites need to give their customers information that is clear, accurate and presented in a way that enables people to choose the best deal for them. But we are concerned that this is not happening and that the information on sites may in fact be making it difficult for people to make the right choice.
“That’s why we have started our investigation into this sector – to get to the bottom of these issues, see whether sites are breaking consumer law and make sure they help, not hinder, people searching for their next hotel room.”
If the CMA finds that a company has broken consumer law, it has the ability to take action through the courts under the 2002 Enterprise Act. This could lead to fines for any company found in breach of legislation.
In January, Booking.com was docked nearly half a million pounds by Turkish competition authorities after it was found to be operating in breach of local regulations. Regulators examined deals made between the website and individual hotels and subsequently blocked the site from selling domestic rooms to Turkish customers.
Trade body the British Hospitality Association expressed their support for the CMA’s investigation. Chief Executive Ufi Ibrahim claimed that 92 percent of the European online hotel booking market was owned by just three parent companies.
She added: “Many of our members have been concerned about the vast power of online booking agencies often charging high rates of commission, use of misleading information, pressure selling, and a lack of transparency. In the process guests are paying more than they should for rooms.”
Ms Ibrahim continued: “The BHA, in submissions to the CMA, has advocated for greater transparency from OTAs, citing increases in prices for consumers and misleading information by websites. Our objective is to not to hinder the growth of the online marketplace but to deliver a fair digital market.”
This investigation is the latest CMA crackdown on online deals after the competition watchdog concluded a twelve-month investigation into price comparison websites in September, which set ground rules for the sites to stay on the right side of various consumer legislation.