IHG cited in online booking probe

IHG and Expedia are being investigated by the OFT

InterContinental Hotels Group (IHG) and two online travel agencies, Expedia Inc and Bookings.com, have been cited by the Office of Fair Trading (OFT) in an investigation into the sale of discounted hotel rooms.

The OFT issued a Statement of Objections yesterday alleging that the three companies have infringed competition law in relation to the online supply of room only hotel accommodation by online travel agents.

The Statement of Objections alleges that Booking.com and Expedia each entered into separate arrangements with IHG which restricted the online travel agents’ ability to discount the price of room only hotel accommodation.

In the statement, the OFT said it considers that the alleged infringements are “anti-competitive, in that they could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers”.

The formal investigation was initiated in September 2010, following a complaint from a small online travel agent, alleging that it was being prevented by various hotel chains from offering discounted sale prices for room only hotel accommodation.

The OFT’s chief executive Clive Maxwell commented; “The OFT’s provisional view is that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law. However, these are the OFT’s provisional findings only.”

Meanwhile other OTAs have cited the difficulty of obtaining access to discounted hotel rates. Travel Republic’s Chief executive Kane Pirie commented; “We have been targeted by some of the global online travel agents who put pressure on hotels not to work with us or offer us those prices. They sometimes even email print-outs of our website to the hotels to complain about our better prices.

“The clear interest of the OFT in this area might give them pause for thought and cut down on their attempts to dictate the market and bully the customer,” Pirie said.

Mark Datta, managing director of Blink Booking agreed that global OTAs held significant power.

 “We’ve long believed that the big online travel agents have been guilty of denying consumers the best prices – and that hotels’ hands are tied by price parity agreements. The online travel market may appear to offer plenty of choice and competition, but the reality is that there are lots of different shop windows selling the same rooms at the same prices – with those prices agreed through parity deals between the big groups and the big OTAs.”

By Mark Elliott, 1 August 2012, Wednesday 2:19 AM