IHG welcomes end of investigation into ‘rate parity'
InterContinental Hotels Group (IHG) has welcomed the decision by the Competition and Market Authority to close its three-year investigation into discounting restrictions surrounding the price of hotels rooms.
The stipulations involved customers signing up to the membership scheme of an OTA or hotel to be able to view specific discounts, and customers making one undiscounted booking with the OTA or hotel in question to be eligible for future discounts. It was agreed that the discounts offered by OTAs will be funded through their commission or margins.
The OFT then closed its investigations. However, the Competition Appeal Tribunal (CAT) sent the case back to the CMA for reconsideration in September 2014 following an appeal regarding the commitments decision by OTA Skyscanner.
Now, after taking a fresh look at the case, the CMA has decided to close the investigation into discounting restrictions on "administrative priority grounds". However, it said it will maintain "a careful watch on how the market develops both in the UK and across Europe". The investigation was one of several that have taken place across Europe into a range of pricing practices in the online booking sector.
The CMA will monitor the effects of recent Europe-wide changes, introduced by Booking.com and Expedia, which remove "rate parity" or "most-favoured-nation" restrictions that prevent hotels from offering cheaper room rates on competing online travel agents' sites than they offer on Booking.com or Expedia.
The new arrangements allow hotels across Europe to offer cheaper rates than on Booking.com or Expedia through other online travel agents, offline, and to certain groups of customers. Rate parity continues in relation to prices offered on hotels' own websites and certain other direct sales channels.
Ann Pope of the CMA said: "It is too soon to tell whether or not the changes made by Booking.com and Expedia will materially change how hotel rooms are priced on the internet. We will continue to watch this closely and welcome views about how the market is developing in light of these changes."
A spokesperson for IHG said the company is pleased the CMA has closed its investigation into this matter "without any finding of infringement" by IHG. "We look forward to continuing to work with the CMA to ensure that consumers benefit from the lowest prices that hotels are able to offer and that there is transparency in the market place."
Judgement reserved on appeal against OFT investigation into illegal rate parity >>
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