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How to... comply with new CMA rules for hotel booking platforms

07 November 2019
How to... comply with new CMA rules for hotel booking platforms

If you’ve not reviewed your sales practices in light of these new principles, you had better move fast. Farina Azam has the full lowdown

The Competition and Markets Authority (CMA) has introduced some new principles for any business offering online accommodation booking services. These cover booking platforms, price comparison websites, online travel agents (OTAs) and hotel websites. However, a recent spot check by Which? magazine alleged that not all hotel booking platforms were complying with the new principles, despite being given six months in which to change their practices.

The investigation into the selling practices of the UK’s largest online hotel booking platforms and comparison sites, including the likes of Booking.com, goes as far back as 2017 when the CMA first looked in to the issue. It was concerned about so-called “pressure-selling” techniques, such as potentially misleading statements about the popularity or availability of certain rooms, as well as a lack of clarity around what the customer would ultimately pay for the room. They considered many of these practices to breach the Consumer Protection from Unfair Trading Regulations 2018 (CPUT).

In February, the CMA introduced a number of principles that came into effect on 1 September 2019, and with which all online hotel booking platforms must comply (see panel).

If you’ve not reviewed your sales practices in light of the new principles, then you need to do so – and quickly. A failure to comply with the principles (or otherwise engage in misleading or unfair sales practices) may place you in breach of the CPUT and could result in criminal liability resulting in an unlimited fine, or even imprisonment if criminal proceedings are brought.

Civil enforcement proceedings by the CMA would also be costly, public and damaging to your reputation. Customers can also claim against you for a refund of the difference between what the customer paid against what they should have paid had it not been for the misleading practice, or a fixed-sum refund for lower-value transactions.

Contact

Farina Azam is a partner in the commercial technology team at Kemp Little LLP farina.azam@kemplittle.com

Steps to take to comply with the CMA

Search results

It must be explained to customers to what extent their search results are influenced by factors that may not be relevant to their requirements, such as the amount of commission a hotel pays the booking platform. This explanation must be in clear and prominent, static text, presented to the customer during the search process. Any paid-for listings shown in the search results must be clearly and prominently labelled as such and differentiated from other listings.

Hidden charges

The price shown must be the total cost to the customer, including compulsory fees, charges and taxes that are reasonably calculable in advance (such as city tax and resort fees). Charges are compulsory if customers cannot avoid them. Where elements of the total price are calculable in a foreign currency, the approximate total must be calculated and included in the total price. An explanation of how the amount has been calculated (eg, the currency exchange rate used) must be provided no later than the stage at which the consumer will complete their booking.

Pressure selling

Any statements made on the website about the popularity and availability of certain rooms, such as claims about how many people are looking at the same room, how many rooms may be left, or how long a price is available for, should be there to inform the customer – it should not be used to create a false impression of room availability or rush customers into making a booking decision. Statements about popularity and availability must be clear, disclose the assumptions, limitations and qualifications that are relevant to the statement, and be substantiated by the hotel booking website’s data.

Reference pricing

All price comparisons must be made on a like-for-like basis, or where there is a difference between the prices being compared, such differences should be communicated clearly to the customer and there should be no indication that the price comparison signifies a discount. Where a comparison is on a like-for-like basis, any indication of a price discount must represent a genuine saving.

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