OFT rooms discount ruling leaves hoteliers confused
Hoteliers have been left perplexed by the ruling by the Office of Fair Trading (OFT) regarding the ability of hotels and online travel agents (OTAs) to offer discounts on room rates.
The OFT has spent nearly three and a half years investigating the practices of InterContinental Hotels Group (IHG) and two online travel agents, Booking.com and Expedia, after allegations were made regarding price fixing between the three parties that infringed competition law.
Now the OFT has closed the investigation after agreeing that all hotels and OTAs will be able to offer discounts on room-only rates after IHG, Booking.com and Expedia accepted commitments to offer membership schemes that would allow customers who had already made one undiscounted booking to view specific discounts.
Gaucho Rasmussen, director of the OFT, said: "We expect the commitments to promote competition across the hotel online booking sector.
"If you are a hotel in the UK and you are currently dealing with Expedia and/or Booking.com, you should expect them to get in touch with you over the next three months to get your agreement to allow them to offer discounts off your room-only rates.
"The commitments also allow hotels to offer discounts in an equivalent manner to OTAs. There should be no limit to the amount of discount a hotel can offer. Hotels should take advice to ensure that any rate parity provisions in place between them and their OTA(s), do not apply to discounts to such closed group members."
However, hoteliers are unclear as to how the OFT ruling will be practically introduced.
Robin Sheppard, chairman of Bespoke Hotels, which operates 82 hotels in the UK, said: "The devil is in the detail. We are looking forward to further enlightenment on this matter."
Laurence Beere, who owns the 29-bedroom Queensbury hotel in Bath, said the OFT's attempt to bring clarity and direction to the industry to improve competitiveness for consumers has failed. "As an independent hotelier I am left completely unclear as to where we stand.
"Why should it be the responsibility of each individual hotel to check whether the terms of the agreement with an OTA are enforceable in relation to rate parity? Why not rule simply on whether the concept of rate parity is fair or not?"
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