Misleading claims about discounts and room availability leads to new UK competition watchdog guidelines for hotel booking sites

The United Kingdom’s Competition and Markets Authority (CMA), its primary competition and consumer authority, is launching enforcement action against a number of hotel booking sites that it believes may be breaking consumer protection law. As part of an ongoing investigation that has been open since Oct-2017, the CMA says it “has identified widespread concerns” into how hotel booking sites operate, including misleading claims about discounts and “rushing” customers into booking decisions by offering a false impression of room availability and “rushing” customers into booking decisions.


Summary:

  • UK Competition and Markets Authority (CMA) is launching enforcement action against a number of hotel booking sites that it believes may be breaking consumer protection law;
  • The UK’s primary competition and consumer authority says it “has identified widespread concerns” into how hotel booking sites operate;
  • The CMA has identified four key issues in its initial findings (search results, pressure selling, discount claims and hidden charges) and will be requiring the unidentified sites to take action to address its concerns;
  • The CMA says it continues to assess the evidence it has gathered on the practices of other online hotel booking sites and could launch further enforcement cases in due course.

The CMA has identified four key issues in its initial findings and will be requiring the unnamed sites to take action to address its concerns, where they are believed to be breaking consumer protection law. It can either secure legally binding commitments from those involved to change their business practices or, if necessary, will take them to court.

The four main issues surround search results, pressure selling, discount claims and hidden charges.

  • Search results: how hotels are ranked, for example to what extent search results are influenced by factors that may not be relevant to the customer’s requirements, such as the amount of commission a hotel pays the site.
  • Pressure selling: whether claims about how many people are looking at the same room, how many rooms may be left, or how long a price is available, create a false impression of room availability or rush customers into making a booking decision.
  • Discount claims: whether the discount claims made on sites offer a fair comparison for customers. For example, the claim could be based on a higher price that was only available for a brief period or not relevant to the customer’s search criteria, such as comparing a higher weekend room rate with the weekday rate for which the customer has searched.
  • Hidden charges: the extent to which sites include all costs in the price they first show customers or whether people are later faced with unexpected fees, such as taxes or booking fees.

“Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them. Holidaymakers must feel sure they’re getting the deal they expected, whether that’s securing the discount promised or receiving reliable information about availability of rooms. It’s also important that no one feels pressured by misleading statements into making a booking,” explains Andrea Coscelli, CEO of the CMA.

“That’s why we’re now demanding that sites think again about how they’re presenting information to their customers and make sure they’re complying with the law. Our next step is to take any necessary action – including through the courts if needed – to ensure people get a fair deal,” he adds.

In addition to its enforcement activity, the CMA has sent warning letters to a range of sites, demanding they review their terms and practices to make sure they are fair and comply with consumer protection law. It is also referring a number of concerns around online hotel booking sites’ price guarantees and other price promises to the Advertising Standards Authority (ASA). The CMA has asked the ASA to consider whether statements like ‘best price guarantee’ or ‘lowest price’ mislead customers and what conditions must be met for companies to make such claims.

The CMA says it continues to assess the evidence it has gathered on the practices of other online hotel booking sites and could launch further enforcement cases in due course. The authority is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.