This week’s Update includes status reports on several ongoing distribution-related court cases involving both hoteliers and distributors.
Conspiracy Theorists Live Another Day
("Lawsuit on hotels' internet advertising tactics moves forward," Reuters Company News on Mar 21, 2019)
Federal District Judge Rebecca Pallmeyer refused last week to toss out claims against several major hotel brands over their alleged conspiracy not to compete online. If you recall, the case centers around plaintiff’s claim that the major hotel brands agreed not to bid on each other’s keyword search terms (which ultimately resulted in higher room rates). The court’s ruling at this very early stage in the case by no means suggests that the plaintiff’s claims have merit. Instead, the court’s decision means (in the words of the court) that the brands had an “opportunity” to compete unfairly. Those interested in a detailed discussion of the plaintiff’s claims and the court’s initial (somewhat skeptical) review of those claims should take a look at the attached court order.
U.S. Circuit Court Deals a Blow to Short-Term Platforms
("Airbnb Loses Major Fight Over California City's Rental Law," Bloomberg Quint - Stories, March 13, 2019)
In somewhat of a surprise ruling issued last week, the U.S. Ninth Circuit Court of Appeals refused to strike down a Santa Monica city ordinance holding short-term rental platforms (Airbnb and Homeaway) legally liable for vacation rentals violating the City’s short-term rental ordinance. In reaching its decision, the Court rejected arguments by the platforms that the ordinance violated both the US Communications Decency Act of 1996 (which shields online services from liability for the content posted by third-party users on their websites) and the platforms’ constitutionally protected rights of free speech. The Ninth Circuit Court’s decision is consistent with other lower court decisions in Los Angeles and San Francisco, but runs counter to a separate Los Angeles lower court decision. While a decision by the Ninth Circuit obviously provides stronger precedential value for courts considering similar local laws and regulations in the future, it remains to be seen whether cities seeking to curb the growth of short-term rentals will seek to leverage this decision to more aggressively pursue the platforms facilitating the bookings as opposed to the hosts themselves.
This week’s Update includes a heavy dose of TripAdvisor updates. Once the dust settles a bit on this past week’s big news – the announced acquisition of Hotel Tonight by Airbnb – we’ll update everyone on the acquisition and its anticipated effects. Is it a game changer? I don’t think so. Does the acquisition expedite the inevitable standardization of products and services across all the major online travel distribution platforms, definitely. In the meantime, enjoy this week’s Update everyone.
Sales Principles Introduced for Online Booking Sites in the UK
("Hotel Booking Sites Get Consumer-law Compliance Principles from CMA," MLex, March 1, 2019) (subscription required)
By September 1, 2019, hotel booking sites operating in the UK must implement mandatory “sales principles” released last week by the UK Competition and Markets Authority (CMA). The release of principles follows the CMA’s months-long investigation into the sales practices of certain online booking sites and the sites’ recent agreement to improve transparency on the sites to avoid further regulatory scrutiny. The principles, which apply not only to OTAs and search engines, but also to hoteliers’ own booking sites, cover sort order, reference prices (e.g., “discount” or strikethrough pricing), hidden charges and pressure selling. According to the CMA, sites that fail to implement the principles by the September 1, 2019 date may be subject to further enforcement action.
On February 19, Bisnow hosted its 2019 Pacific Northwest Hotel Summit held at the Four Seasons Hotel in Seattle. Reputed real estate property developers, hotelier and principal consultant of an architectural and design services firm convened to share their insights on how Seattle’s booming tourism is impacting the hotel industry, specifically with regard to the increase in development, investment, supply, and branding of hotel properties.
This week’s Update includes a report on the EU Commission’s widespread examination of online platforms’ pricing practices and an update on the much-publicized standoff between United and Expedia. Enjoy.
Online Platforms Lack Price Transparency
("Most online shops lack price transparency, EU Commission," MLex, February 22, 2019)
Following the latest annual “sweep” of online platforms conducted by the EU Commission and members of the EU’s Consumer Protection Network (CPN), the EU Commission issued a press release last week previewing their findings (a full report will available shortly). According the press release, nearly 60% of the 560 websites reviewed by the Commission and CPN members demonstrated irregular compliance with EU rules, largely around pricing and discounting. Examples of the “irregularities” included (i) inauthentic or false discounting claims, (ii) inadequate disclosures of mandatory fees or other charges added to the final price and (iii) inadequate information about a consumer’s right to terminate a transaction. Although this latest sweep did not focus specifically on online travel platforms (online travel was the focus of a 2016 sweep), the findings and potential enforcement efforts resulting from this latest sweep are sure to affect a broad variety of e-commerce platforms, including travel.
Greg Duff founded and chairs Foster Garvey’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.