Cheaper hotel rooms could be offered by online booking agencies after an on-going investigation by the Office of Fair Trading (OFT) into agreements between online travel agents and hotels.
The OFT looked at allegations that Booking.com and Expedia had an agreement with Intercontinental Hotels not to undercut its rates. Intercontinental Hotels says it will now allow online booking agencies more power to discount room prices.
The commitment by the three companies has not yet been confirmed. If it is, the OFT says, it should mean cheaper room rates worldwide and the investigation will close.
Intercontinental, which denies any anti-competitive behaviour, is the world’s largest hotel chain with brands including Crowne Plaza and Holiday Inn. Online travel agent Expedia said it welcomed the commitment “which will enable the OFT to close its investigation without taking any action”. The OFT said the previous agreement between the hotel chain and the two booking websites, which are the largest in the world, had effectively set a bottom level for discounts.
The investigation began after booking website Skoosh.com, said that a number of hotel companies were preventing the online retailer from selling room-only deals at discount prices. It said last year that it had received calls and emails from hotel companies threatening to take legal action over its discounts.
The three firms involved reached a compromise which allows websites to offer lower room rates than the hotel company itself, but only to certain users – for those who have made a previous booking with the agent or those who have signed up to the site. This means the hotel companies can keep some control over the price offered to first-time customers.
If the deal is accepted by the OFT and other industry parties, the hotel group will not face a lengthy investigation into the practice and will avoid any fine that might have resulted.
In 2010, the value of UK hotel bookings through agents added up to £850m.
OFT’s senior director Ann Pope said: “The OFT is consulting on whether these commitments offer an immediate and effective means of injecting some meaningful price competition into the online offering of room only hotel accommodation bookings where, in our provisional view, none may exist.”
