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ASA slaps IHG's wrist for advertising hotel rooms excluding VAT

24 May 2012 by
ASA slaps IHG's wrist for advertising hotel rooms excluding VAT

The Advertising Standards Agency (ASA) has warned Intercontinental Hotels Group that it must not use adverts showing prices for hotel rooms excluding VAT again.

The ASA took action after a complaint that IHG had displayed room prices without including VAT on two of its booking websites, www.crowneplaza.com, and www.ichotelsgroup.com, both of which displayed prices for rooms in a London hotel in bold black text. Underneath each price, the text stated ("Excludes VAT").

Intercontinental Hotels Group told the ASA it would in principle be prepared to display the prices for its London IHG-branded hotels as VAT-inclusive prices in the future, but only if its competitors were also required to do so.

IHG said that only a small proportion of IHG branded hotels were either owned or managed by IHG; the majority were owned by third parties and managed by various franchisees. It said it only had the direct ability to set room rates for those hotels which it managed and that while it could direct its franchisees to display VAT-inclusive prices, the franchisees were ultimately in control of whether that process was followed or not.

The company added that its website displayed VAT-exclusive prices for around half of its London hotels and that the text "(Excludes VAT)" was clearly stated under the prices of rooms in those hotels

But the ASA upheld the complaint, despite the fact that it understood IHG faced technical challenges in ensuring that all UK hotel room prices were advertised inclusive of VAT.

However the ASA said that the Committee of Advertising Practice (CAP) code stated that VAT-exclusive prices may be given only if all to whom the price claim was addressed paid no VAT or could recover VAT. Because the ASA thought the adverts were likely to be viewed by consumers who must pay VAT, it decided the adverts were misleading.

It ordered IHG that the ads must not appear again in their current form.

By Neil Gerrard

E-mail your comments to Neil Gerrard here.

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