The Competitions and Markets Authority (“CMA”) has secured a victory for UK holidaymakers as a number of the largest online hotel booking sites will be forced to make some major changes.
Expedia, Agoda, Booking.com, Hotels.com, trivago and ebookers have been the subject of CMA enforcement action due to its deep concerns that they routinely engaged in pressure selling, misleading discount claims, the effect that commission had on how hotels are ordered on their sites and hidden charges. The CMA took action because it felt that such practices could mislead people, stop them finding the best deal and potentially break consumer protection law.
The fundamental piece of consumer protection legislation relevant to the CMA’s investigation is the Consumer Protection from Unfair Trading Regulations 2008 (“CPUT”). CPUT contains a general prohibition against 31 ‘blacklisted unfair practices’ considered always unfair such as falsely stating that a product will be available for a very limited time in order to obtain an immediate decision. CPUT also contains specific prohibitions against misleading actions, misleading omissions and aggressive commercial practices.
The CMA has stated that all of companies that were under investigation have co-operated with its work. , Whilst not all of the companies were found to have engaged in all of the practices stated above, they did nevertheless all voluntary agree to abide by the following principles:
Search results: to make it clearer how hotels are ranked, including whether or not the hotels paying the ranking sites more have received a position higher up the search result list.
Pressure selling: to not give a false impression of the availability or popularity of a hotel or rushing customers into making a booking decision based on incomplete information. For example, when saying that other customers are also looking at the same hotel, it should be made clear if they are searching for that hotel but on different dates. The CMA found that some sites were also placing sold-out hotels within search results to put pressure on people to book more quickly.
Discount claims: to be clear about any discounts and only promoting deals that are actually available at that time. In carrying out its investigation, the CMA found that sites were comparing a higher weekend room rate with a weekday rate or comparing the price of a luxury suite with a standard room.
Hidden charges: displaying all compulsory charges such as taxes, booking or resort fees in the headline price. Sites can still break that price down, but the total amount the customer has to pay should always be shown upfront.
The CMA will monitor compliance with the above commitments made by the booking sites and that it requires all changes must be made by 1 September 2019 at the very latest. Moreover, the CMA has stated that it is committed to ensuring that the rest of the sector meets the same standards
Whilst this investigation by the CMA was specific to the 6 identified travel sites and their particular industry, businesses should be aware that CPUT has a much broader application and will apply to ALL commercial practices, during the whole lifetime of any business, to consumer transaction, including advertising, marketing, entry into a contract, performance and enforcement.
The wider business community should therefore take steps to ensure that they do not fall foul of complying with CPUT.
If you require any further advice or information in relation to any of the issues raised in this article then please do not hesitate to contact a member of our Commercial Team or our Food Drink and Hospitality Sector specialists