Duff on Hospitality Law

This week’s Update features multiple stories and perspectives on AmexGBT’s newly announced acquisition of CWT and Booking.com’s decision to drop its own sustainability ratings.  I hope you enjoy.

• • AmexGBT Set to Acquire Rival Travel Management Company CWT.  First the details . . .  According to AmexGBT CEO, Paul Abbott, the $570 million acquisition will allow AmexGBT to grow its corporate customer base by 4000 customers and will increase AmexGBT’s transaction volumes and revenues by 45% and 33%, respectively.  Other announced benefits include growth in certain key customer segments (energy, resources, marine and media, among others) and growth in AmexGBT’s small and medium sized enterprise (SME) business (a focus historically for both AmexGBT and CWT).  Increased automation and the leveraging of the AI technologies behind CWT’s myCWT platform are also among the other proposed benefits.  So what does this proposed merger between travel giants mean for others in the travel industry?  What about Expedia (which currently owns 16% of AmexGBT and has a 10-year lodging supply agreement with AmexGBT) and Booking.com (whose corporate travel program is a current partner of CWT and powers CWT’s SME business)?  Will the combined company only source inventory through one major OTA?  Only time will tell.  For direct travel suppliers, the additional leverage will make historically challenging negotiations even more difficult.   

• • Booking.com Drops “Travel Sustainable” Program.  Following criticism from the Netherlands Authority for Consumers and Markets (ACM), Booking.com announced last week that it had removed its Travel Sustainable accommodation scores from its booking platform.  According to the ACM, Booking.com’s presentation of the program was misleading and wrongly gave travelers the impression that travel is sustainable.  Booking.com now intends to rely on third party certification programs and will provide properties a label when they have received a third-party sustainability certification.

• • DOJ and FTC File Statement of Interest in Algorithmic Price Fixing Case.  This past week the U.S. Department of Justice and Federal Trade Commission filed a joint statement of interest in a pending case against major casino hotel operators alleging that the operators violated U.S. antitrust law by agreeing to use a third party computer pricing algorithm to set room prices.  According to the agencies, hotels cannot use algorithms to engage in conduct that is otherwise illegal if done by a real person.  The statement clarified two important aspects of U.S. anti-trust law as it relates to the use of pricing algorithms.  First, claimants do not need to prove that competitors spoke directly, particularly when an algorithm provider that works with the competitors is alleged to be acting in concert.  Second, an agreement among competitors to use a pricing algorithm is unlawful, even if the competitors retain some pricing control.  This isn’t the first time that one or both agencies have intervened in cases involving pricing algorithms.  In recent cases involving the real estate industry and meat processing industry, the agencies challenged competing firms’ use of pricing algorithms.  A copy of the agencies’ joint statement is linked to our story below.