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Honest hotel pricing: Brits lead the way

The British Competition and Markets Authority (CMA) has negotiated agreements with six major online travel agencies (OTA) to make sure their terms and practices are fair and comply with British consumer protection laws.

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This is great for British travelers and we can hope it will prod the U.S. into similar action. Specifically, those agreements stipulate that the OTAs will avoid several obviously deceptive practices:

  • They will make it clear how hotels are ranked after a customer has entered search requirements. Among the more important requirements, OTAs will tell people when search results have been affected by the amount of commission a hotel pays the site.
  • They will not give a false impression of the availability or popularity of a hotel or rush customers into making a booking decision based on incomplete information. The agreement means when they post a notice that other customers are looking at the same hotel as you, they make it clear others may be searching for different dates. The CMA also saw examples of some sites strategically placing sold-out hotels within search results to put pressure on people to book more quickly.
  • They will be clear about discounts and promote only those deals that are actually available at that time. Examples of misleading discount claims include comparisons with a higher price that was not relevant to the customer’s search criteria. For example, some sites were comparing a higher weekend room rate with a weekday rate or comparing the price of a luxury suite with a standard room.
  • They must include any mandatory “resort” or other fees in the full initially posted price. It’s OK, says CMA, for hotels to break the full price into a low base rate plus a mandatory fee for internal accounting purposes, as some airlines do, but mandatory fees must be included in the displayed cost to consumers from the get-go.

So far, Agoda, Booking.com, Ebookers, Expedia, Hotels.com and Trivago have agreed to comply, without admitting any misbehavior, and CMA says it will keep after others. CMA is also addressing similar problems with metasearch engines and hotel-chain systems, with a compliance deadline of September 1.

As you probably know by now, requiring hotels and OTAs to include mandatory “resort” and other fees in the initial rate display has been a personal soapbox for me for several years. I have engaged with Travelers United and Business Travel Coalition in attempts to convince the Federal Trade Commission (FTC) to take a similar approach with U.S. hotel chains and OTAs, so far to no avail. The supposed FTC standard is to take action against advertising that is “per se” deceptive, a test which excluding mandatory fees from a posted price clearly passes. The Department of Transportation has long since banned the airline practice of excluding “fuel surcharges” and their equivalents from posted rates, but the FTC has stuck its collective head in the sand and refused to ace beyond sending out a single innocuous warning letter.

This is a big win for British consumers, but it doesn’t help U.S. consumers directly. It should, however, serve as a wakeup call to the big OTAs that what they’re now doing in the U.S. is deceptive. I don’t hold out much hope for the FTC; as long as I can remember FTC takes years to recognize a deception that most people would see in only a few minutes.

But the big OTAs have an opportunity to get out in front if the issue. They’ve already agreed to avoid deceptive pricing in the UK, so there’s no question about whether posting honest prices is feasible. In fact, if they’re posting honest prices in the UK, it might well be practical to extend their postings to the U.S.

How about it, Expedia, Booking and others — who will be the first to boast they’re showing honest hotel pricing? In addition to being honest, it might even increase your market share.

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