An investigation into the online hotel booking sector may present an opportunity for booking sites to reposition themselves in an ethical light.
Hotel booking sites and the CMA
The UK regulatory authorities will require hotel booking sites to change their misleading selling techniques, potentially decreasing their revenues but hopefully earning improved consumer trust in the process.
A probe was launched 14 months ago after concerns were raised regarding pressure selling, obscure discount claims and hidden charges.
Clean-up operation
Expedia, Trivago, Hotels.com and eBookers – brands owned by the Expedia Group – as well as Booking.com and Agoda, both run by Booking Holdings, were investigated by the UK’s consumer protection regulator, the Competition and Markets Authority (CMA).
Andrew Tyrie, Chairman of the CMA, described the sales strategies as “wholly unacceptable” and described the result as “a victory for UK holidaymakers”.
A requirement to improve transparency by revealing hidden charges and to provide true indications of a rented room’s popularity were emphasized in the agreed terms.
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By GlobalDataThe affected companies also agreed to halt using ambiguous price comparisons – typically indicated with prices in strikethrough, or with terminology such as “% off”. The use of evasive price comparisons has also been blocked.
Although these techniques are not illegal they have the potential to tarnish reputations. Given that many consumers trust leading booking websites, the leading players must respond positively or risk losing extensive return trade.
The ripple effect in business
The significance of these changes may even cause ripples beyond the tourism sector into the retail sector, forever altering how companies can market their products and services.
The expectation is that loopholes, such as the ones used by hotel booking companies, will close contributing to improved transparency for consumers.
It is expected that the effects will not just impact these companies. Blue-chip companies in the tourism sector will have to review their selling techniques to evade CMA probes. Online travel agencies, search engines and hotel groups are examples of industry players who will have to meet these requirements.
All companies co-operating in the investigation agreed: “to ensure that consumers are not misled about the amount they will have to pay and that wherever a price is displayed the total price is displayed”.
Expedia: turning a negative into a positive
Comments from the booking sites regarding the investigation results have been optimistic. In a statement, Expedia said it had: “invested significant time and energy into working closely with the CMA to create a helpful industry standard for all UK booking sites offering accommodation search and booking services”.
Evidently, Expedia has used the investigation as an opportunity to position their brand in a more ethical light as campaigners for a standard that all UK booking sites should aspire. This is a smart response which will re-gain and increase consumer trust.
