This week’s Update features several stories detailing a recent report by the U.S. Consumer Financial Protection Bureau (CFPB) regarding mounting consumer credit concerns with buy now, pay later credit products. The CFPB report can be found here.
Here Come the Regulators
(“Buy Now, Pay Later: Market Trends and Consumer Impacts,” September 15, 2022 via Consumer Financial Protection Bureau)
(“’'Buy Now, Pay Later' Lenders to Be Subject to Same U.S. Oversight as Credit Card Companies,” September 15, 2022 via MLex) (subscription may be required)
Given the meteoric rise of buy now, pay later (BNPL) products, it shouldn’t be that surprising that the consumer financing method is now garnering the attention of U.S. regulators. Last week, the CFPB issued a report on the consumer impacts of BNPL, suggesting that lenders providing these vehicles merit regulation similar to that governing credit card companies. Key takeaways from the report include the following:
- The five firms surveyed for the report originated 180 million BNPL loans totaling $24 billion in 2021 (a near 10-fold increase over 2019 levels)
- Loan approval rates are rising (over 73 percent of applicants were approved in 2021)
- Late fees are becoming more common (over 10 percent of borrowers were charged a late fee in 2021)
- Identified areas of potential consumer harm arising from these products include (i) inconsistent consumer protections, (ii) borrower data harvesting and (iii) the most obvious, borrower debt accumulation and overextension
This week’s Update includes stories on fintech’s continued growth and rumors regarding Sabre’s possible future. I hope you enjoy.
More Platforms Turning to Fintech Products to Foster Growth
(“Ixigo, Amadeus Latest to Add New Fintech and Payment Options,” September 16, 2022 via Phocus Wire)
Indian travel app, Ixigo, and Amadeus both recently announced plans to adopt new payment tools to their booking platforms. Travelers booking air travel on Ixigo will now be given the opportunity to purchase “flexible” tickets that allow travelers to change their flight (dates of travel, airline and destination) and pay only the difference in fares. This new tool, Ixigo Flex, will supplement Ixigo’s current offering, Ixigo Assured, which allows travelers to cancel a flight for any or no reason at any time. Amadeus announced plans to partner with fintech providers, Uplift and Fly Now Pay Later, to offer supplier partners and agencies the opportunity to provide travelers a new buy now pay later option.
Sonesta Moves Small Group Bookings Online
(“Sonesta Introduces Hybrid Concierge, a Digital Meeting Planning Service,” September 9, 2022 via Lodging Magazine)
Sonesta announced plans last week to offer groups the opportunity to book small group meetings entirely online through CVENT’s Instant Book platform. The new online platform will be offered initially at approximately half of Sonesta’s managed properties and will allow users to view and book meeting space, select meeting room set ups and review available AV options – all online. Bookings will be handled via a single online, all-inclusive contract. Sonesta’s remaining managed properties will offer the new booking functionality by the end of 2022.
Happy Labor Day to those of you in the U.S. celebrating our last gasp of summer. Last week’s Online Travel Update features several stories regarding Google’s recently announced plan to wind down entirely its “Book on Google” booking platform. I hope you enjoy.
Book on Google Winds Down
(“Google to Phase Out Book on Google for Flights,” September 2, 2022 via Phocus Wire)
(“Google Will No Longer Be a Place to Book Travel as Fewer Travelers Were Using It,” September 1, 2022 via Skift) (subscription may be required)
Following its discontinuance of Book on Google for hotels back in May of this year, Google announced last week plans to shutter the facilitated booking service entirely with the closing of Book on Google for flights. Users outside the United States will see the service end on September 30, and users inside the United States will see the service end in March 2023. Once the service ends, users of Google’s search engine will be re-directed to suppliers’ and/or OTAs’ sites to make the desired booking directly. According to Google, the decision to end the service was based on users’ preferences to book directly on suppliers’ websites or via OTAs. Is this the official end to so-called “facilitated” booking platforms? It will be interesting to see whether other meta search sites (e.g., TripAdvisor) soon reach similar conclusions.
The last unofficial week of summer was relatively slow in the online travel world, though last week did see the release of the European Commission’s report on its recent study into the current status of hotel room distribution in the E.U. We’ve attached a short summary of the report as well as a link to the report itself. What this study might mean for hoteliers and OTAs in the E.U. remains unclear, particularly with one or more of the major distribution platforms possibly poised to become regulated under the Digital Markets Act (DMA). Enjoy.
E.U. Hotel Distribution – Update
(“Hotel Booking Market Sees Little Market Entry and Price Differentiation, EU Study Says,” August 26, 2022 via MLex Insights) (subscription may be required)
(“Europe’s Hotel Booking Sector Broadly Unaffected by Antitrust Intervention, Commission Concludes," August 26, 2022 via MLex Insights) (subscription may be required)
Long time readers of our Update know that for several years our weekly Update featured frequent updates on E.U. member countries’ investigations and ultimately, settlements involving OTAs’ distribution practices (largely around rate and availability parity). As a result of these various investigations, several countries banned contractual privity requirements altogether while others adopted so-called “narrow” parity, allowing OTAs to maintain only their direct channel rate parity requirements. These investigations and settlements have served as the basis for countless OTA contractual negotiations over the past several years. Now, the European Commission has taken a close look at the effects of these various approved practices on competition among distribution channels – both direct (hotel) and indirect (OTA). While I’ve not yet had a chance to read the entire report, a few items from the attached summary are worth noting:
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.