Duff on Hospitality Law

After a few incredibly busy weeks in online travel, this past week was relatively quiet.  Enjoy.

• • Booking.com Launches Cruises in the U.S.  For years now, we’ve featured stories in our weekly Update detailing the many challenges of booking cruises online.  The multitude of available sailings, cabins, pre and post accommodations, excursions, etc. were always referenced when explaining why cruises would never fit well on traditional online booking platforms.  Booking.com seems committed to change that.  Last week, Booking.com began offering cruises to U.S. users through a white label cruise site with cruise agency, World Travel Holdings.  A similar partnership with Priceline already exists.  Users of the new platform will be able to select from over 10,000 sailings, and customers booking on the new platform will find exclusive offer and be eligible to receive shipboard credits of up to $1000 (depending on amount spent to book the cruise).  World Travel Agents will handle the bookings (which will be made via phone), customer service and customer emails. 
    
    

• • Airbnb May Look (Again) to Hotels to Fill Accommodations Demand.  Faced with a regulatory crackdown that has slashed the number of its NYC rental listings, Airbnb may soon turn to boutique hotels to fill the gaps.  Airbnb CEO, Brian Chesky, reported in last week’s earnings call that boutique hotels presented “a real opportunity” for addressing the recent regulatory changes.  Readers of our Update will recall that Airbnb went down this hotel road before – even going so far as to create a special category for hotels on its platform- but that it ultimately dropped the effort with the onset of the pandemic.  Since that time, it has been difficult to discern whether Airbnb viewed hotels as a real opportunity.  We will have to wait and see whether this latest effort by Airbnb is different than the past. 

For those of you who I saw in Long Beach this past week at the HSMAI Sales Forum, it was great to see you. 

It is earnings season, which makes for a longer Update than usual:

• • Expedia Enjoys Strong Third Quarter Results.  While I am still working my way through the recent Expedia Group earnings call transcript, news of the recent quarter has been uniformly positive.  Expedia reported strong results (quarterly records in both revenue and EBITDA and a third quarter record in gross hotel bookings ($18.5 billion)) and even stronger results for its growing B2B business ($995 million in revenue, up 26% year over year and a quarterly record).  During the third quarter earnings call, Expedia CEO, Peter Kern, was optimistic about the prospects for the platform’s business now that its unified loyalty program OneKey and technology platform is complete.
    
    
  • Booking Holdings Also Enjoys a Strong Third Quarter.  Expedia’s largest competitor, Booking Holdings, also enjoyed a record third quarter.  Booked room nights and gross booking value ($39.8 billion) set new quarterly records.  Beyond hotel room accommodations, flights featured prominently in Bookings’ third quarter results with the platform selling 9 million flights during the quarter.
    
    
  • Google’s Anti-Trust Trial:  The Gift That Keeps Giving.  Over the past month, we have featured multiple stories detailing the testimony of various OTA executives at the ongoing Google anti-trust trial.  This past week, the comments of Expedia Group Chairman (and outspoken spokesman), Barry Diller, surfaced in the ongoing proceedings.  According to the reports, the comments were made by Diller back in 2019 when he claimed that he was “on the edge of a revolt” over Google’s increased monetization (e.g., paid display advertising) of its search results.  According to Diller, the increasing numbers of paid ads was punitive to Expedia and anyone else relying on a level search playing field. 
    
    
  • Another Week and Another Story on Scammers Leveraging Booking.com’s Messaging Platform.  This week’s story comes to us from Singapore.
    
    
  • IHG’s Attribute Based Bookings Are Here.  While IHG’s effort to offer guests attribute-based booking functionality has long been the subject of industry reports (including our own Update), it appears that the functionality is now available, with new functions coming.  Through the IHG app, guests can now book rooms based on their location and view.  IHG hotels will soon also be able to offer add-ons (e.g., prepaid parking, food and beverage credits) to guests booking on the app.  According to IHG, offering these attributes presents an entirely new revenue opportunity for its properties.  It will be interesting to watch how third party platforms respond to attribute based bookings and pricing, which present an entirely new meaning to rate and availability parity.

Have a great week everyone. For those of you attending next week’s HSMAI Sales Leader Conference in Long Beach, I hope to see you there.  I will be presenting at the sales leader roundtable.

This week’s Update features updates on several recently featured stories, including Booking.com’s ongoing payment and fraud challenges and new legislative efforts to limit junk fees.

• • OTAs Raise Issues with Airlines’ Aggressive Tactics.  Online travel agents, On the Beach and UK Holidaymakers, have raised objections with the UK’s Competition and Markets Authority (CMA) over the aggressive tactics of Ryanair (and other discount airlines) to push travelers to book direct.  According to the paper presented to the CMA and UK government, discount airlines are harming consumer choice by blocking sales of certain products (seat-only offerings), charging excessive OTA fees and delaying refunds.  The OTAs are asking the UK competition authority to mandate that airlines provide with fair access to products and services and create a code of conduct for airlines and their OTA partners.  Really?
    
    
  • Citi and Navan Announce Partnership.  Further to my comment in last week’s Update about the explosion of interest in small and medium businesses (SMB), Citi and Navan announced this past week a new partnership under which the parties will offer a travel and expense solution for Citi’s Commercial Bank cardholders.  For those companies that provide Citi cards to their employees, the new solution will provide services that rival competitors SAP Concur and Egencia.  With the deal, Citi will be well positioned to grow its commercial card member base by offering travel and expense services.  

For those of that attended the recent Georgetown hospitality law event, it was great seeing so many of you in person.  Have a great week everyone.

From the number of announcements this past week by travel industry members detailing their new online small and medium business initiatives, someone must have deemed last week “small and medium business week.” We’ve included a few of the more interesting announcements in this week’s Update.  Enjoy:

• • Google Trial Continues to Provide Interesting Insight into OTAs Online Advertising.  In last week’s Update, we featured the testimony of a senior Booking Holdings executive.  This week, we feature the testimony of a former senior Expedia executive.
    
    
  • Rival Platforms Form New Coalition to Fight Fake Reviews.  Much was written this past week about several prominent online platforms’ (including Booking.com, Expedia and Tripadvisor) newly announced coalition against fraudulent online reviews.  In this week’s Update, we include the story from the perspective of Seattle’s own, Geekwire.  The newly formed “Coalition for Trusted Reviews” is notable as it is one of the few instances (perhaps only) where three major online travel rivals come together for a common objective.  According to Amazon (which has been quite active pursuing fake reviews), the Coalition hopes to define best practices for hosting online reviews and to share effective methods for detecting and stopping fake reviews.  The Coalition next meets in December at a meeting organized by Amazon.
    
    
  • Booking.com’s Payment Challenges Lead to Class Action Lawsuit.  Over the past few weeks, we’ve featured several stories about Booking.com’s payment platform’s apparent delay in making much needed payments to hotels in Europe and Asia.  According to one operator in Japan, the payment delays still continue.  Now, a group of Japanese hoteliers are planning a class-action lawsuit against Booking.com.
    
    
  • How Much Do Hoteliers Really Pay Intermediaries?  According to industry consultant, Max Starkov, the amount for 2023 is a staggering $50 billion.  If you include the costs associated with corporate travel agents and traditional travel agencies in the total, Skift estimates the yearly total climbs to $75 billion.      

Resort fees garnered most of the industry’s headlines this past week as California’s governor signed legislation prohibiting hidden fees and the Federal Trade Commission finally released its proposed federal trade regulation – “Rule on Unfair or Deceptive Fees.”  The good news is that both laws appear to apply equally to suppliers and third party distribution platforms.  Highlights:

• • Hopper Terminates Its Supplier Contract with Booking.com.  As noted briefly in last week’s Update, Hopper has indeed terminated its supplier agreement with Booking Holdings.  In an effort to avoid the public fallout (including demands by several of its B2B customers) that occurred following Expedia’s termination of its supplier agreement with Hopper, Hopper elected to strike first and terminate before Booking could do so.  Until Skift broke news of the Booking contract’s termination, most were unaware that Hopper had such a contract.  Days following the Booking contract’s termination, Hopper announced its widespread layoffs, which according to recent reports, resulted in the complete shuttering of Hopper’s home rental offering and the loss of Hopper’s entire B2C team in APAC.  With these recent changes, Hopper’s ability to secure and maintain direct supplier relationships will be critical to its long term success. 

• • The True Value of Paid Search Advertising – At Least According to Booking.com.  And we thought the OTA giant was seeking to move away from paid search advertising.  Think again.  In testimony at the ongoing anti-trust trial against Google, Booking.com Senior Vice President and Chief Marketing Officer, Arjan Dijk, stated that the platform could not stay in business but for the traffic it receives from display advertising on the search engine.  When asked about the relationship between Google and Booking.com, Dijk noted that the relationship is completely one-sided, characterizing the relationship as a benevolent dictatorship. 

• • California Prohibits Hidden Fees.  As we reported a few weeks ago, California governor Gavin Newsom had options when considering how best to address so-called junk fees.  Of the two options awaiting signature – one focused on the hospitality industry and the other drafted more broadly to apply to any industry that features advertised or displayed pricing - the governor chose the broader option.  Effective July 1, 2024, the newly signed legislation prohibits the display of a price that does not include all mandatory fees and charges (excluding shipping charges and government imposed charges).  Note that the legislation does not require that the total price be the most prominently displayed – like other standards.  Under the California legislation, all advertised prices must reflect the “total” price.  The legislation applies equally to suppliers and their OTA counterparts and will require “total” pricing both for hotels located in California (regardless of whom might see the listing) and for hotels located outside California whose listings will be shown to California residents. 

Have a great week everyone.  For those of you attending next week’s hospitality law event in Washington D.C., I hope to see you there. 

This week’s Update features a variety of stories, including the latest on Hopper and its apparent ongoing transition.  Enjoy.

• • Expedia Expands B2B Network in Asia / Pacific.  This past week at its Explore 23: Connect Asia event, Expedia announced it had expanded its B2B network to include several new Asian companies.  While Optimized Distribution is only one of several business initiatives for Expedia, it remains an area of big investment.  Recently announced suppliers relying on the B2B redistribution platform include Dusit Hotels and COMO Hotels and Resorts. 
    
    
  • Hopper’s Latest:  Clicks, Job Cuts and New Termination.  Hopper continued to garner much of the industry’s attention this past week as the war of words between Hopper and Expedia continued (it was all about clicks and screens), Hopper announced significant job cuts and according to reports today (Sunday), Hopper announced the termination of another larger supplier (Booking.com).  As for the expressed concerns of Expedia CEO Peter Kern regarding the numbers of clicks or screens required to complete a booking on Hopper (and the resulting likelihood of customer confusion), we too noted similar concerns when recently reviewing the Hopper mobile app and booking process for one of our clients.  If you’ve never spent much time on the Hopper app, you should.  It is a vastly different experience.  Job cuts at Hopper were reported this past week by Canadian news publications – the cuts result in the loss of roughly a third of Hopper’s total work force (250 employees).  According to a Hopper spokesperson, the cuts were part of Hopper’s overall effort to boost its business (a/k/a reduce expenses and turn a profit) and focus on direct supplier connections.   Finally, reports issued this morning by Skift suggest that Hopper may have terminated its supplier agreement with Booking.com.  Look for more news on this latest change at Hopper in next week’s Update.
    
    
  • Potentially Landmark ADA Case Unlikely to Produce Much Needed Decision.  In oral arguments this past week, several of the U.S. Supreme Court justices indicated that they are unlikely to consider any further the potentially landmark ADA case challenging whether serial plaintiffs who have no intention of ever staying with their targeted defendants have legal standing to sue for ADA website violations.  Unfortunately, the plaintiff in the case (serial litigant, Deborah Laufer) voluntarily dismissed her claims against Acheson Hotels (in part, because her lawyer has been suspended for filing hundreds of ADA claims).  For those of us looking for some much needed direction and support in combating these types of serial litigants, the Supreme Court’s refusal to consider the case further is unfortunate. 

The EU Commission’s official decision to block Booking Holdings’ planned purchase of eTraveli (a decision that Booking has publicly criticized and committed to challenging) garnered much of the news this past week, as well as stories from Skift’s annual Skift Global Forum held in New York this past week.  Enjoy.

• • Effects of Expedia / Hopper Split Explained (by Hopper).  In an interview this past week at the Skift Global Forum, Hopper founder and CEO, Fred Lalonde, claimed that Expedia (not Hopper) suffered the ill effects of the sudden termination of the parties’ supply agreement.  According to Lalonde, concerns over competition led to Expedia’s decision, not Expedia’s purported consumer concerns.  Lalonde cited Hopper’s growing market share in flights (at the expense of Expedia) as support of his competition claims.  Any concerns that Hopper might have had about the loss of important hotel inventory may be short lived as Hopper also announced last week new hotel supplier deals with wholesalers Hotelbeds and WebBeds (on top of Hopper’s growing number of direct supplier contracts). 
    
    
  • EU Commission Officially Vetoes Booking’s Purchase of eTraveli.  The long awaited decision by the EU Commission regarding Booking Holdings’ proposed purchase of eTraveli finally arrived.  In short, the Commission believed that the acquisition would have further cemented Booking’s already dominant market position (60% market share) in hotel distribution in the EU.  With an enhanced flight offering (identified by the Commission as a major acquisition channel for prospective hotel guests), Booking would have been in a position to expand its travel ecosystem and thereby drive even more traffic to its platform (ultimately resulting in higher costs for hoteliers and consumers).  In rendering its decision, the Commission considered and ultimately rejected Booking’s proposed compromise – a so-called “carousel” whereby a Kayak powered menu of competing hotel offers from other OTAs would have been shown upon checkout by flight customers.  According to the Commission, the fact that the carousel would have been powered by a Booking Holdings company led to questions of transparency and possible discrimination.  As we have noted in prior Updates, Booking has publicly criticized the EU’s decisions (as late as last week at the Skift Global Form) and has vowed to fight the Commission’s decision.  More to come . . .  
    
    
  • Expedia’s “Fall Release 2023” to Feature a Number of Consumer Improvements.  According to recent announcements by Expedia, its planned fall release of updated products and features contains a little something for everyone.  Consumers will soon have the opportunity to converse (via ChatGPT) with Expedia’s brand apps (Expedia, Hotels.com and VRBO) about prospective properties’ amenities and services.  Conversational travel guides will also be made available to users of the Expedia and Hotels.com app.  Other new app features include “Trip Planner,” a new tool to allow travelers to plan group travel, and improved functionality for managing users’ loyalty program (“One Key”) accounts.

We’ve found fall to be the busiest of all seasons in the online travel world as everyone returns to work from summer breaks and the dates of the major online travel conferences are fast approaching.  As you can see from the long list of stories in this week’s Update this fall is no different.

• • Resort Fee Updates.  Perhaps the biggest news this past week was out of California where previously discussed California legislation has made it to the California governor’s desk for signature.  Whether Governor Newsom will sign one or both of the new bills remains to be seen.  Under the California legislation, it would be illegal to display a rate (or pricing generally) without including all mandatory fees and charges (excluding taxes).  The legislation would apply to both hoteliers and online platforms and would require the display of total price to both listings (for properties wherever they may be) shown to travelers in CA and CA listings shown to those outside CA (which, practically, like in so many other contexts, will cause most hoteliers and platforms to convert to total price everywhere).  Governor Newsome has until October 14 to sign or veto the bills.  If the governor does nothing, both would become law by default.  Other resort fee updates from this past week include Hilton’s announced transition to displaying mandatory fees up front (exactly what that means remains to be seen).  Hilton’s announcement, like so many others, encouraged uniform treatment among hoteliers and their online platform counterparts.  Also making news was Choice’s announced settlement with state attorneys general in Pennsylvania, Colorado, Nebraska and Oregon.  Under the settlement, Choice has agreed to move to total price by the end of 2023.
    
    
  • Booking.com to Launch U.S. Credit Card.  Many of last week’s online travel headlines focused on Booking.com’s “leaked” plans to launch a U.S. co-branded credit card.  No one should be surprised by this announcement, particularly those that have spent any time considering the pros and cons of embracing Booking’s payment platform.  Booking.com’s financial partner for the card is unknown.  With the launch of a co-branded credit card, Booking.com will be better positioned to leverage the many opportunities associated with its payment platforms include traveler credits, rebates and other traveler benefits. 
    
    
  • MakeMyTrip’s Corporate Booking Platform Making Progress.  While much of the attention regarding new corporate travel platforms goes to the larger, more established platforms, MakeMyTrip’s corporate platform, MyBiz, has been quietly recording successes.  With a goal to automate users’ entire booking process (through generative AI and other technologies), the Indian platform now offers foreign and domestic flights, hotels, trains and cabs.  In its four years of existence, the platform has already grown to over 50,000 users.

This week’s update includes a variety of stories, including an explanation by the UK’s CMA as to why it viewed the proposed Booking Holdings and eTraveli merger differently than its European competition counterparts. Highlights:

• • CMA Explains Differences with European Counterparts Over eTraveli Merger.  As our readers will likely recall, the UK’s competition authority (the Competition and Markets Authority) previously approved the planned merger of Booking Holdings and eTraveli, while its European counterparts at the EU Commission are rumored to be vetoing the merger.  According to a chief economic advisor at the CMA, the divergent outcomes are the result of different authorities faced with different facts and different consumers.  Speaking more broadly, the advisor added that the Booking / eTraveli merger generated “ecosystem” concerns (i.e., largely undefined concerns that a technology platform and its many interconnected businesses become entrenched and ultimately harm innovation and competition).  In short (my two cents), the CMA’s differing view of these so-called “ecosystem” concerns led to it reaching a different outcome. 
    
    
  • Credit Card Travel Platforms:  A Quick Overview.  For those of you seeking a summary of the credit card travel platforms (and their attributes) currently available (platforms we’ve covered in several posts the past year or two), the attached story from Forbes provides a helpful overview. 
    
    
  • Kayak’s Shift to Corporate Travel.  Since Kayak’s release of “Kayak for Business” in the summer of 2021, over 30,000 small and medium businesses have used Kayak’s booking tool.  But Kayak’s aspirations don’t end there.  Kayak is now targeting large corporate clients.  With its partner Blockskye (a blockchain-based startup), Kayak has been developing and testing an enterprise solution with PwC.  Since last fall (2022), the Kayak enterprise solution has processed more than 400,000 bookings for PwC’s 65,000+ employees in the United States.  According to Kayak CEO, Steve Hafner, the goal of the new solution is multifold – disintermediate traditional GDSs (via NDC), “stick it to the credit card companies” (via direct payment solutions) and take on existing (disfavored) market legacies – American Express GBT and Concur (through a better overall solution).  It will be interesting to watch how these legacy corporate platforms – including Amex GBT and Concur – respond to this newest corporate offering.  More to come. 
    
    
  • Booking.com Partners with Affirm.  Wait.  What?  Among the many potential benefits or detriments (depending on your perspective) of Booking.com’s much lauded payments platform is the ability to offer guests a variety of consumer friendly fintech products, products offered through Booking Holdings’ fintech business.  With its recently announced partnership with Booking.com, Affirm can now boast that it powers the consumer financing options (BNPL) for the two largest online travel platforms - Expedia and Booking.com.  Affirm also powers consumer financing options for other Booking Holdings’ companies – Agoda, Priceline and Kayak.  I have to admit, I’m a little confused.  If Booking Holdings is making huge commitments to create its own fintech unit, why partner with Affirm?  Change of direction?  Temporary solution?  Learning opportunity for Booking?  Perhaps a realization that creating your own platform (build) is far more difficult (and costly) than partnering (buy)? 

This week features a heavy dose of Booking Holdings’ updates, including updates on the story we featured last week regarding Hungary’s recent decision to launch a formal investigation into the country’s online travel industry.  Enjoy.

• • AI Trip Planners Are Everywhere.  While we all have read stories detailing the major booking platforms’ adoption of generative AI for trip planning (some of those stories have been featured in our weekly Update), smaller AI powered niche planners are now popping up everywhere.  This past week, Skift featured three new planners – Troupe (short term rentals), GenixGPT (“hidden gems”) and JetAI (private plane charters).  What’s obvious is that not all of these planners will make it - fall out is inevitable.  What will be interesting to watch is how many, if any, will be acquired by the major booking platforms.
    
    
  • Booking.com’s Payment Delays – Part II.  Last week we featured a story detailing the decision by the Hungarian competition authority to open an investigation into the country’s online travel booking industry, driven in large part by Hungarian hoteliers’ multiple complaints regarding delayed payments (room rate less commission) via Booking.com’s payments platform.  Apparently, the problem was a little more widespread than just Hungary (affecting hoteliers throughout Asia), may have dated as far back as April of this year (and continued through the heavy tourist seasons for many) and may have even affected commission payments to members of Booking’s affiliate network (though Booking claims these delays were part of planned maintenance of its systems).  Meanwhile, back in Hungary, Hungarian officials raided the Budapest offices of Booking.com on Wednesday (September 6) as part of its ongoing industry investigation.