Duff on Hospitality Law

This week’s Update features two interesting stories on distribution in the airline and cruise industries, which caused us to question what, if any, lessons can be drawn for those in the lodging industry. Enjoy.

Air Carriers Accused of Abusing Dominant Position in Online Travel
("Big airlines' should draw EU antitrust action over price transparency, passengers' lobby says, MLex, January 17, 2019) (subscription required)
Wait. What? Really? When have we ever seen a headline like this in online travel? Much publicized attempts by airlines to offer passengers who book direct the option of creating custom travel packages (via a menu of ancillary services offered) are now getting the attention of travel-user groups across the EU, including the European Passengers’ Federation (EPF). This past week, the EPF complained to the European Commission that airlines’ transition from traditional distribution channels (i.e., GDS) to direct channels is making it increasingly difficult for passengers to compare offerings (in the manner that standardized (i.e., old) GDS distribution channels might allow) and violates (if not the language, at least the intent and purpose) the EU law governing computerized reservation systems. According to the EPF, airlines’ use of their direct and customized booking channels has made it increasingly difficult for users to identify other available modes of transportation (e.g., rail or bus) and to appreciate the differences among the airlines’ various ancillary products and services. This latest complaint comes on the heels of complaints raised last December by the European Technology Travel Services Association (ETTSA) that Lufthansa’s refusal to offer intermediaries its lowest fares evidence Lufthansa’s dominant market position and discriminatory behavior. Lobbyist for the GDS providers are definitely working overtime these days...

Voice-assisted devices (a/k/a smart speakers) feature prominently in this week’s Update. Enjoy.

New Platforms Brought to Regulators’ Attention
("Smart speakers, publishing platforms and connected cars prompt antitrust concerns," MLex, January 8, 2019) (subscription required)
Given the lessons learned years ago when Microsoft’s operating system (allegedly) ruled the desktop world, it wasn’t surprising to see reports this past week that European competition experts have alerted the European Commission of the potential gatekeeping power of voice-assisted devices (e.g., Alexa, Siri, etc.). According to these experts, as adoption of these popular devices grows, so does the potential for abusive (i.e. exclusionary) behavior. Hoteliers at times have raised similar concerns with the growing use of these popular devices. Unlike desktop or mobile search applications, which return multiple responses to users’ queries, these devices typically return only one response. If, for example, an online travel agent or particular hotel company was able to strike an exclusive relationship with these platforms (and therefore become the sole supplier of travel products and services), it could effectively shut out other distributors or hoteliers from this increasingly important point of sale.

Mistakenly Discounted Rates a Regular Occurrence
("$16,000 first class seats sold for $675. Errors like these are more common than you’d think," Vox, January 4, 2019)
Details emerged this past week about Cathay Pacific’s unprecedented discounting of first class and business class tickets on certain flights. In some instances, the discounted tickets reflected over a 95% discount off the normal fare. As suspected by many (including those who report on such discounts), the discounts were not intentional and were instead the result of a technical glitch in Cathay Pacific’s systems. Whether for legal reasons or reputational concerns, Cathay Pacific chose to honor the discounted fares for those customer who purchased tickets before the glitch was discovered. From our own experience (and as confirmed in the article below), these mistaken fares (and hotel room rates) are somewhat of a regular occurrence. While there are things an airline or hotel company can do in advance to help avoid the need to honor these mistaken fares and rates, the potential reputational harm (particular in this age of travel blogs) often demands that companies honor the mistaken fares and rates.

Despite a Change in Name and Business Model, Priceline is Back
("Remember Priceline? After a Comeback and a Name Change, It’s Betting Big on China," Wall Street Journal - Business, December 28, 2018)
Booking Holdings Inc. (fka Priceline.com) is back. The attached Wall Street Journal story provides a great overview of Booking Holdings’ rise from the 2001 dot-com ashes as its market value grew from less than $200M to greater than $100B (earlier this year). From all appearances, Booking Holdings is now betting its future on Chinese travelers and the many travel technology companies that cater to them.