Duff on Hospitality Law

For those of you in the United States, I hope you enjoyed your long holiday weekend – the unofficial kickoff to summer. Our weekly Online Travel Update is below.  It’s been a few weeks since we featured a story on banks’ growing influence in travel, but this week’s Update includes stories on two large banks – Australia’s CommBank and JP Morgan Chase.  Highlights include:

• • Booking’s Plan Purchase of Etraveli Runs into Regulatory Objections.  For some time now, we have been following Booking’s planned purchase of flight-booking platform, Etraveli.  This past April, the European Commission announced that it was re-commencing its review of the planning acquisition after several months of delay.  This week, sources familiar with the investigation reported that the Commission was poised to issue a statement of objections to both companies detailing the Commissions’ anti-trust concerns.  While such a statement may not kill the planned purchase, it may require the companies to offer compromises to the identified concerns. 
    
    
  • JP Morgan Chase Details Growing Travel Platform.  JP Morgan Chase shared an update on its travel platform, ChaseTravel.com, this past week at an investor day.  According to Chase, total sales volume on the platform totaled $8 billion in 2022 and it expects that number to increase to $10 billion this year.  The number of travelers who purchased travel through the platform increased 40% year over year.  Travel is a critical component of Chase’s lifestyle business, which also includes shopping and dining. 
    
    
  • Hopper Announces Partnership with Australia’s Largest Bank.  CommBank, Australia’s largest bank, announced this past week that it was partnering with Hopper (via Hopper’s B2B platform, Hoppercloud) to exclusively power the bank’s new travel features, offering users of its mobile application the opportunity to search and book hotel, air and rental cars.  As part of the partnership, Hopper will offer CommBank users price predictability, integration with CommBank’s loyalty awards program (earn and redeem) and the usual mix of fintech products and services. 

As evidenced by our list of stories, it was a relatively quiet week in online travel.  The Texas Attorney General’s Office and its pursuit of hotel companies over their resort fee practices garnered most of the industry’s headlines (exactly as the Texas AG wanted). Some highlights from this week:

• • Following Its Settlement with Marriott, Texas AG Targets Hyatt.  With a settlement in hand with Marriott, the Texas Attorney General is now targeting other national hotel brands and operators with claims that their rate and resort fee practices violate Texas consumer protection laws.  In announcing the settlement, Texas Attorney General Ken Paxton stated, “Marriott is now taking proactive steps to promote price transparency.  In contrast, other major hotel  chains have defended their deceptive practices, and they will be facing the full force of the law for their actions.”  Apparently, Hyatt is next on the Texas AG’s list as the AG’s office filed suit on Monday against Hyatt. 
    
    
  • Fact or Fiction:  Instant Booking for Meetings and Events.  For some time now, we’ve been working with clients to move their sales and contracting practices for small meetings and events to online platforms (both proprietary and third party) with the promise that small meetings and events can be booked instantly.  But do these tools really work?  Is that what meeting planners and groups really want?  Or do the many nuances of a successful meeting or event (as compared to a rooms only leisure booking) make them too difficult to book entirely online?  This past week, Skift, offered its perspective on these instant booking platforms. 

For those of you attending the upcoming week of events in Toronto (HSMAI’s Commercial Strategy Week), I would enjoy connecting.  I’ll be presenting on Monday at the Executive Roundtables and facilitating that afternoon the discussion at the Chief Distribution Officer roundtable.  I hope to see you there!

Welcome to our weekly Online Travel Update. Expedia’s many announcements at its Explore 23: Connect conference this past week garnered most of the industry headlines, while Uber moved closer to becoming a full online travel booking platform. Recent news highlights include:

• • CWT Partners with Booking.com’s Booking for Business.  Want to participate in Booking.com’s corporate booking platform, Booking.com for Business?  You may have no choice now.  CWT and Booking.com announced last week a new partnership under which CWT will provide the corporate booking platform discounted (and perhaps, loyalty program) rates and inventory for its suppliers’ hotels, flights and rental cars.
    
    
  • Uber to Offer Flights to UK Users.  Users of Uber’s transportation booking application in the UK will soon be able to search and book flights.  Powered by Hopper, the new functionality will include Hopper’s signature fintech products, including Prize Freeze and Cancel for Any Reason.  Uber plans to roll out the new offering across the UK this summer with no announced plans to introduce the offering outside the UK.
    
    
  • Expedia Announces Several New B2B Initiatives.  At Expedia’s Expedia 23:Connect conference held this past week in Seattle,  Expedia announced several new B2B initiatives, including a new partnership with Mastercard that allows issuers of the cards to allow users to redeem credit card loyalty program points for travel products and services offered through Expedia.  Other announcements at the event include the launch of Expedia’s travel operating system (Travel OS), whose first commercial “micro-service” will help users protect against fraud, the launch of Expedia’s guest experience score, the launch of new rate management capabilities for those suppliers using Expedia’s optimized distribution (OD) platform and the launch of new capabilities for travel agencies using Expedia’s Travel Agent Affiliate Program (TAAP).  For those of you wanting a more intimate view of last week’s Connect event, we’ve included a story about the event from Seattle’s own technology newsletter, Geekwire.

Our weekly Online Travel Update for the week ending Friday, May 5, 2023, is below. We hope you enjoy:

• • Airbnb Releases Summer Update.  Airbnb garnered much of the industry’s attention this past week with a series of announcements related to its release of its latest (summer) update.  The update includes a number of important changes to the platform and the booking experience, including (i) a renewed focus on individual (cheaper) private rooms (“Airbnb Rooms”) with each listing featuring additional information about the room’s host, (ii) the addition of new, streamlined check-out instructions that are displayed prior to booking, (iii) “transparent” pricing (more on that later), (iv) discounted rates for longer lengths of stay or direct debit payments and (v) improved customer support.  In a likely effort to address growing calls for regulation limiting the use of mandatory fees (i.e., cleaning fees), Airbnb’s release includes pricing toggles that allow users to view the total price (rate plus mandatory fees, excluding taxes).  As many of us know, these types of toggles are used today by several major lodging operators and thus far have not satisfied regulators’ call for pricing transparency.
    
    
  • EU Gatekeeper Process to Begin.  For those of you who read our earlier stories about the EU Digital Markets Act (DMA), you’ll likely recall the significance of the DMA’s “gatekeeper” designation.  Under the DMA, gatekeepers, which are large online platforms whose size allows them to act as private rule makers, will be prohibited from engaging in certain behavior.  Of particular interest to our readers is whether Booking.com will receive the designation.  If it does receive the designation, Booking.com, among other things, will be prohibited from requiring any form (narrow or broad) of rate or availability parity from its suppliers throughout the EU.  Potential gatekeepers have until July 3 to provide required details about their core services to the EU Commission.  The Commission then has until September 6 to decide whether the company satisfies the gatekeeper requirements.  Designated gatekeepers will have 6 months to comply with the DMA’s requirements.
    
    
  • American Airlines Seeks to Shut Down Use of Re-shopping Technology.  Over the years we’ve included a number of stories detailing re-shopping services – automated services that continuously monitor previously booked fares and rates and then automatically cancels and re-books flights and accommodations when the fares or rates drop.  American Airlines has apparently had enough with these services.  Last week, the airline announced that advisors that use the services after June 1 will be subject to debit memos or have access to certain American Airlines content cutoff.  Additional penalties might also include suspension or termination of advisors’ authority to sell the airlines’ fares.  Terms and conditions of the policy were distributed to advisors via an addendum to the advisors’ agency agreement and added to customers’ contracts of carriage (which applies to all customers). 
  • Resort Fees and Other Mandatory Charges.  Changes are coming.  With Marriott’s rollout of display changes later this month, expect the change by Marriott (which many view as the gold standard on issues such as these) to be followed by noticeable changes by other industry suppliers in their display of rates.  What about OTAs, you ask?  Perhaps changes by Marriott and other industry members might finally force aspiring attorneys general and regulators to take a hard look at OTAs.  Maybe.  Let’s hope.

Our weekly Online Travel Update for the week ending April 28, 2023, is below.  It was another relatively quiet week in the online travel industry, with Hyatt garnering much of the attention with its end of week announcement regarding its planned purchase of Mr. and Mrs. Smith.  Enjoy.

• • Hyatt Acquires Booking Platform – Mr. and Mrs. Smith.  On Friday, Hyatt announced that it has reached agreement to purchase boutique hotel booking platform, Mr. and Mrs. Smith.  The platform provides direct booking access to over 1500 independent, boutique hotels around the world, including hotels in 20 countries where Hyatt currently has no presence.  With its purchase, Hyatt will ultimately be able to add 1500 hotels to its existing booking channels and thereby offer its loyalty program members (and those 1 million plus members of Mr. and Mrs. Smith) even more destination alternatives.  The purchase is expected to close in the second quarter. 
    
    
  • Washington State Passes Privacy Legislation.  Just another state setting out on its own until federal legislators step in to finally get serious about national data privacy?  Not exactly.  As many of you know, privacy and data security play a prominent role in just about every online relationship, which is why we are covering this new legislation here.  While the title of Washington’s recently enacted “My Health My Data Act” might suggest that it applies exclusively to sensitive to health information, Erin Snodgrass (our newest hospitality industry team member) explains why such an interpretation is likely wrong. 
    
    
  • Choice Hotels Join Groups360’s GroupSync Marketplace.  Add Choice to the list of major brands to endorse Group360’s online group booking tool – GroupSync Instant Booking.

This week’s Update features a variety of stories, including updates on Ryanair’s attempts to stop platforms’ scraping of fares and other content from its website.  We will continue to keep monitor Ryanair’s claims against Booking.com in the weeks ahead.  Enjoy.

• • European Commission Resumes Review of Booking Holdings’ Proposed Purchase of ETraveli.  It’s been some time since our last story on Booking’s planned purchase of online flight booking platform, ETraveli.  The Commission suspended its review of the purchase approximately four months ago, but announced this past week that it was resuming its work.  The Commission has until August 30 to complete the review. 
    
    
  • Fintech, Tips, Support Service Fees and More:  Hopper Has It All.  Much has been written in the industry (including our own Update) about Hopper.  Hopper was one of the first platforms to fully leverage “fintech” tools as part of its B2B and B2C offerings.  With the renewed attention on resort fees and other mandatory charges, Skift’s recent article about “tips” on Hopper’s booking platform caught our attention.  Although Hopper’s “tip” is not mandatory, users of the platform (assuming they even see the charge) must affirmatively opt-out of payment the flat-fee or percentage charge.  Hopper takes a similar approach with support service fees, which also require an unsuspecting user to opt-out of paying the additional charge.  Does the ability to opt-out of these charges allow Hopper to avoid current efforts to reign in so-called “junk fees,” possibly, depending on the conspicuousness of the fees and their disclosures.  If the tips are simply a mechanism for offsetting operating costs (as opposed to actual “tips” paid to individuals who assist in making the booking), however, Hopper could garner the attention of regulators or an enterprising class action firm. 
    
    
  • Expedia Launches Platform to Make Entertainment Tourism Bookable.  Expedia Media Solutions announced last week the launch of a new media platform that allows users to shop and book travel while watching travel content.  If successful, the platform will allow Expedia to capitalize on the growing influence of television and movies (think “White Lotus”) on travelers’ decisions.  Brand USA has partnered with Expedia in the launch of this latest new offering by working together to create a dedicated channel (GoUSA) that features inspirational travel content and interactive maps, while at the same time allowing viewers the opportunity to book featured destination (hotels, air and experiences) in real time.  The channel is now live in Canada and will be rolled out to other international markets over the course of the year. 

As evidenced by the stories in this week’s Update, this past week was a relatively quiet week in online travel.  Not surprisingly, many of this past week’s headlines featured the recent report by Phocuswright suggesting that the online booking channel pendulum has once again swung back in the OTAs’ favor.   Enjoy.

• • How Do You Attract and Convert More Online Bookings?  Act Like a Retailer, Not a Hotelier.  A recent survey conducted by Travelport revealed that travelers, particularly younger travelers, want the same “simple, easy and supportive experience” they receive from every other online sector (other than travel).   So how do hoteliers address these issues?  Provide simplified and intuitive shopping experiences, easy support and transparency.  Other key takeaways from the 2000 consumer survey include (a) 59% of consumers report that getting exactly what they want is more important than price, (b) 84% of younger (18-41) consumers want human led customer support (so much for ChatGBT) and (c) 49% of consumers would pay more for travel to save on carbon emissions. 

• • TripAdvisor Releases Biennial Review Transparency Report.  TripAdvisor has released its biennial Review Transparency Report.  According to the Report, of the nearly 30 million reviews received by the online review platform, 4% of the reviews were determined to be fake or fraudulent in 2022.   TripAdvisor’s fraud detection process identified 72% of the fraudulent submissions before they were posted online.  TripAdvisor also reported that it removed more than 24,000 reviews as originating from paid review companies and imposed ranking penalties on more than 33,000 businesses for fraud.

• • OTAs Once Again Receive the Majority of Online Bookings.  According to a recent report by Phocuswright, OTAs are again enjoying the majority of online hotel bookings.  Prior to the pandemic (largely driven by hoteliers’ much-publicized direct booking efforts and robust loyalty programs and then favorable public perceptions during the pandemic), hoteliers were able to reduce their reliance on OTAs.  Now, during this post pandemic period, OTAs have taken back some of their lost share.  Prior to the pandemic, OTAs’ share had dropped as low as 49% of online gross bookings, but that number has now rebounded to 52%.  For reference, each percentage point can represent $1B in business (or $100M - $200M in commissions).  So why the shift?  Experts point to OTAs’ advantage in marketing (marketing investments have again ramped up post pandemic) and improving technology.  How a possible 2023 recession might again affect the two sides’ relative market share remains to be seen.

This week’s Update features the obligatory Expedia / ChatGPT story as Expedia garnered most of this past week’s industry headlines with its announced integration of ChatGPT into its iOS application.  For those of you following the evolving competition landscape in the EU, you might find our lead story regarding the EU Commission’s recent release of its 2022 overview of some interest.  For those of you interested, links to the EU Commission’s report and accompanying staff working document (detailing, among other things, ongoing efforts in the travel industry) are available in the featured story. 

• • European Commission Releases Report Summarizing Its 2022 Policy Initiatives.  While the Commission’s report provides a good high-level review of the Commission’s 2022 initiatives, the accompanying Commission Staff Working Document provides much greater detail about many of the Commission’s initiatives broken down by both “competition instruments” and industry specific enforcement efforts.  Of particular interest is the Working Document’s discussion of the lodging industry (found on page 92 of the Working Document), highlighting the Commission’s 2017-2021 study of hotels’ distribution practices following several member states’ adoption of so-called narrow parity requirements and suggesting that the study and possibly the DMA (hello Booking.com) would continue to play a role in the Commissions’ future monitoring and enforcement in the industry.  For those of you wanting more information about the 2017-2021 study, we included the study in an earlier Update and a copy of the study’s results is available here.
    
    
  • Lufthansa’s Innovation Hub Launches Meetings Booking Platform - Cloopio.  In an effort to better leverage the WFH and hybrid work models, Lufthansa’s Innovation Hub (LIH) has launched a new booking platform designed to promote “curated team off-site packages.”  Cloopio’s offerings (initially around Berlin) include transfers, accommodations, meeting rooms, catering and team building activities.  Cloopio is the second small group booking platform launched by LIH. 
    
    
  • Kayak Abandons Plans to Become Lifestyle Hotel Operator.  Anyone surprised by this announcement?  We’ve featured several stories over the past year or two about Kayak’s robust ambitions to launch a lifestyle hotel business.  Kayak CEO and co-founder, Steve Hafner, recently confirmed the news first reported by Skift, that Kayak late last year shuttered its lifestyle hotels business (laying off its development team in the process).  Hotels currently operating under the “Kayak” brand will drop the name as leases for those hotels expire.  Notwithstanding the change in direction, Kayak still plans to build out a hotel technology business, leveraging its ongoing relationship with hotel operator, Life House. 

This week’s Update features an important update from my partner Eryn Hoerster on recently proposed federal legislation designed to reign in alleged drip pricing abuses.  Readers of our Update know that we’ve featured several stories over the past year detailing efforts at the federal and state level to address these so-called junk fees, including efforts at the FTC, state enforcement efforts and proposed state legislation (by both Republicans and Democrats).  Expect many more stories on this evolving issue in the months ahead.  Enjoy.

• • Senators Introduce The Junk Fee Prevention Act.  On March 23, 2023, Senators Richard Blumenthal (D-CT) and Sheldon Whitehouse (D-RI) introduced federal legislation seeking to eliminate “excessive, hidden and unnecessary fees” (including hotel resort fees)  that are imposed on consumers.  Details of the bill are available in Eryn’s update below.  Fortunately, as drafted, the bill targets not only hoteliers, but also third parties that advertise rates for short-term lodging (i.e., OTAs).
    
    
  • Adaptive Content to Redesign Booking.com Search Results.  In an interview last week at Skift’s Future of Lodging Forum, Booking.com’s Senior Vice President and Chief Technology Offer, Rob Francis, offered attendees a glimpse of changes that might be coming to the OTA via the introduction of ChatGBT or other similar AI technologies.  According to Francis, this new technology will allow the platform to deliver search results reflective of the type of user doing the search and the user’s intent (versus one or more potentially misleading search terms).  Francis believes that Booking.com will have a distinct advantage against its competitors in leveraging these new AI tools given its long history with AI and dedicated AI work force. 
    
    
  • American Airlines Forces Adoption of NDC.  What better way to get travel agents to embrace your new preferred connectivity solution than limiting certain (preferred) content to only that solution?  On April 3, American Airlines moves forward with its controversial plan to make certain content available only through NDC connections.  While agents may still view these preferred fares via their legacy GDS connections,  agents will be forced to use an NDC connection to make the booking. 

On March 22, 2023, Senators Richard Blumenthal (D-CT) and Sheldon Whitehouse (D-RI) introduced a bill “to limit and eliminate excessive, hidden, and unnecessary fees imposed on consumers.”  In response to President Biden’s call for legislation, the “Junk Fee Prevention Act” was referred to the Senate Committee on Commerce, Science and Transportation for consideration. 

The Junk Fee Prevention Act targets fees and pricing disclosures in the lodging, ticket, and to a limited extent, the airline and communications industries.  With respect to the hotel and lodging industry, the proposed legislation could result in a reset in the market for hotels that charge a resort or amenity fee, and provide a level of uniformity between price disclosures made by hotels directly and those made by third-party applications used to advertise and book hotel rooms.

Specifically, the legislation would apply to both hotel/lodging providers as well as any third-party that “advertises rates or the purchase of short-term lodging.”  Such covered entities would be required to display – at the first time any price is shown – the “total price” of the lodging, including any “mandatory fee” that is either required, not reasonably avoidable, or not expected by a reasonable consumer to be included in the price.  Violation of the Junk Fee Prevention Act would amount to an “unfair or deceptive act or practice” pursuant to the Federal Trade Commission Act.  Enforcement would be provided by the FTC as well as State Attorneys General. 

The Junk Fee Prevention Act is the latest legislative proposal aimed at targeting resort fees, following the February 2023 announcement of AB 537 in California. Similar bipartisan legislation was introduced in September 2019 in the US House of Representatives but was not enacted.

Click here to access the contents of the bill.