Duff on Hospitality Law

Special Announcement

Welcome to our inaugural issue of Foster Garvey’s OTA & Travel Distribution Update. On October 1^st, the combination of Garvey Schubert Barer and Foster Pepper into the new Foster Garvey became effective. The combined firm now boasts 180 attorneys in 6 offices – Seattle, Spokane, Portland, New York, Washington D.C. and Beijing. Personally, I’m thrilled to have played a small role in bringing these two long-standing firms together and excited by the prospect of having twice the resources to better serve our hospitality and travel clients. Details about the combined firm are available at www.foster.com. More to come....

As for the Update, it was a relatively quiet week on the distribution front as opinions and viewpoints regarding the recently announced Expedia/Marriott agreement continue to roll in. What this agreement might ultimately mean for the industry is unknown, but as other distributors and bed banks race to offer hoteliers “similar” intermediary services, there is definitely a wholesale shakeup on the horizon.

Enjoy.

Travel Industry Pricing Practices Garner Singapore Regulator Attention
("Online travel sites' drip pricing can raise competition issues, Singapore antitrust agency says," MLex Insight on Sep 30, 2019)
Following completion of its recent investigation into Singapore’s online travel industry, the Consumer and Competition Commission of Singapore (CCCS) released last week its findings and proposed guidelines. The investigation identified four widely used practices by online travel providers that raise consumer protection concerns: (1) drip pricing, (2) pre-ticked boxes, (3) strike-through pricing and (4) pressure selling tactics that lead to a false sense of urgency (many of these same practices led to the recently proposed “principles” in the UK). In an effort to address some of these concerns, the CCCS report contains proposed price transparency guidelines, including mandatory inclusive pricing (all mandatory fees and charges must be included in the headline price). A copy of the CCCS report and proposed guidelines, which remain open to public comment through October 21, can be found here. 

Consumer protection concerns are a re-occurring theme in this week’s Update. 

Proposed Legislation Targets Resort Fees
("House Bill Would Halt Undisclosed Resort Fees," Benzinga.com on Sep 27, 2019)
This past Wednesday, House members Bernice Johnson (D-TX) and Jeff Fortenberry (R-NE) introduced the Hotel Advertising Transparency Act of 2019.  The federal legislation (a copy of which is attached) requires advertised room rates to include all “required” fees (other than taxes).  Violations of the Act are deemed to constitute unfair and deceptive trade practices under the FTC Act and subject to FTC enforcement.  Given our current political climate, it is doubtful this legislation will ever go far.    

A good mix of stories in this week’s Update, including another name change for one of the largest OTAs.  Enjoy.

The CMA Declares Victory
("Major overhaul of hotel booking sector after CMA action," Competition and Markets Authority (CMA) (gov.uk) - All Content on Sep 13, 2019)
On Friday, the UK Competition and Markets Authority (CMA) issued a press release touting the number of online hotel booking sites that have now implemented the CMA’s sector wide principles for complying with the UK’s consumer protection laws.  According to the CMA, 25 companies – including traditional OTAs, metasearch sites and major hotel chains – have agreed to change how they display rates, inventory and other booking information.  What was perhaps most interesting about the press release, however, was the CMA’s announcement that it is co-leading an international effort by consumer protection agencies around the world to examine the hotel industry’s consumer protection law compliance.  Details about this international effort can be found on the group’s website - https://www.icpen.org

Fall has definitely arrived here in the Pacific Northwest. This week’s OTA & Travel Distribution Update is below and features stories on TripAdvisor, Booking.com, Vacasa and the soon-to-be-effective, Strong Customer Authentication (SCA). Enjoy.

TripAdvisor Continues to Defend Claims of Fake Reviews
("TripAdvisor defends itself against claim that up to one in seven reviews might be fake," CNN Recent News on Sep 6, 2019)
It seems that every few months we hear claims that some material portion of TripAdvisor’s many guest reviews are suspect. The latest claim comes from UK consumer group Which? Travel, which claims that 1 in 7 reviews for the 10 top ranked hotels in 10 global destinations is fake. According to Which? Travel, it evaluated nearly 250,000 reviews for the top ranked hotels and found “blatant hallmarks” of fake reviews. What is perhaps most troubling about this latest claim, is that many of hotels identified by Which? Travel as benefitting from these allegedly fake reviews had been previously identified by TripAdvisor as using fake reviews within the past year (and in some cases, even penalized for the reviews). Hotels located in the Middle East and Las Vegas were identified as likely being some of the worst culprits.

Ettsa demands Europe-wide harmonisation of hotel booking rules
Travel Weekly (UK) - News on Aug 30, 2019
The European technology and Travel Services Association (Ettsa) has demanded EU regulators enforce tighter standards “on all players” in the accommodation-booking sector. Ettsa welcomed new standards imposed on the sector by the UK Competition and Markets Authority (CMA) which come into force on September 1.

With summer coming to an end, I anticipate a healthy dose of Update worthy items in the weeks ahead. 

The Sabre/FareLogix Saga Continues to Unfold
Last week we featured a story detailing the US Justice Department’s planned litigation against Sabre should it carry through with its announced plans to close its FareLogix acquisition last week.  By now, everyone knows that the Justice Department made good on its promise and has likely read the dozens of stories detailing the many factual allegations behind the claims.  We’ve included a copy of the Justice Department’s complaint for those interested in seeing first-hand the Justice Department’s apparent new approach to anti-trust enforcement where dominant industry members seek to “stamp out” their upstart (and potentially disruptive) competitors. 

Sabre Likely to Face Anti-Trust Challenge
("DOJ Poised to Sue to Block Sabre’s Deal for Farelogix," Bloomberg News on Aug 16, 2019)
Following up on a story we featured back in April...According to reports coming out of the U.S. Justice Department, the anti-trust division is prepared to file suit as early as Monday to put a stop to Sabre’s planned acquisition of Farelogix, which is scheduled to close Wednesday.  As noted in our previous stories, opponents of the proposed acquisition fear that Sabre (purveyor of legacy GDS systems) is seeking to acquire Farelogix (purveyor of new technology) simply to quash the upstart competitor. 

This week’s Update features a story on relative newcomer to third party distribution (Southwest Airlines) and includes, yet again, another update on the on-again/off-again saga of Booking.com commissions.  Enjoy.

Southwest Airlines Takes a Contrarian Approach
("Southwest Airlines adds content to two GDSs," Phocuswire on Aug 7, 2019) 
In an era when airlines are seeking alternatives to traditional distribution channels, renegade Southwest has again decided to take a different approach.   Southwest announced last week plans to provide content and full booking capabilities to two key global distribution system providers – Amadeus and Travelport.  The move, according to Southwest president, Tom Nealon, rounds out Southwest’s three-legged distribution strategy for business travel – direct, Swabiz and now, GDS.  The addition of traditional GDS to Southwest’s distribution arsenal is expected to add $10-$20 million in additional revenue during the last half of 2020. 

Sabre Vows To Fight EU Allegations
("Sabre will 'vigorously defend against any allegations' of rule-breaking in EU probe," MLex Insight on Aug 2, 2019)
In its recent US securities filing, Sabre has pledged to “vigorously defend against any allegations of anti-competitive activity” by the European Commission in connection with the Commission’s anti-trust probe of both Sabre and its primary competitor, Amadeus.  Since November last year, the European Commission has been investigating the two market leaders’ contracts, focusing specifically on whether the contracts contain provisions preventing airlines from providing more information to rivals’ distribution systems or even prohibiting use of rival distribution systems.  According to questionnaires sent to airlines earlier this year as part of the investigation, the European Commission is trying to determine the significance of the two companies on ticket distribution and whether that significance influences their pricing and contracting practices. 

This past week was relatively quiet in the distribution world as evidenced by the few stories below.  Enjoy.

Booking.com Relaxes Keyword Restrictions on Its Trademarks
("Booking.com relaxes keyword bidding clause with hotels," Phocus Wire on Jul 22, 2019)
In a purported effort to comply with a recent unidentified ruling in the EU, Booking.com sent notices to many of its hotel suppliers this past week advising them that existing contract restrictions prohibiting the suppliers from bidding on Booking.com’s keywords (e.g., Booking.com) were being removed.  While the change may make for interesting headlines, it is doubtful that many suppliers will race to their nearest search engine to begin bidding on Booking.com’s keywords.  Unfortunately, suppliers should expect to hear a lot more about this change and Booking.com’s need for reciprocity while negotiating critical keyword protections on their valued marks in the future.