Duff on Hospitality Law

With summer in full swing, it is no surprise that this past week was another slow week in the online travel industry.  Our recommendation?  Enjoy this week’s Update with a drink in hand by your pool or other favorite body of water.  Enjoy:

• • OpenAI Launches Agent Mode.  On Thursday this past week, OpenAI officially released new functionality (ChatGPT Agent) that can search and book hotels, activities and flights on behalf of its ChatGPT chatbot users.  Pro, Plus and Team users of ChatGPT have or will soon have access to the new agent with Enterprise and Educator users to follow.  According to ChatGPT, the agent can create custom travel plans (using users’ provided destinations and preferences) and itineraries complete with maps and hotel and activities bookings.   Over time, as the agent learns of users’ preferences, the agent will factor those preference into its proposed plans and itineraries.  A demo released as part of the launch shows a user using the new agent to plan and book a trip for an upcoming wedding.  In the demo, the agent uses Booking.com to review hotels’ availability and rates and then book. 
    
    
  • New Intermediary Seeks to Help Hoteliers Leverage AI Platforms.  DirectBooker, a startup backed former TripAdvisor CEO, Steve Kaufer, and ex-Google Travel head, Richard Holden, is building a B2B platform to feed rich (differentiated) hotel content (ARI) to AI platforms directly and allow hoteliers to bypass the emerging content stranglehold held by OTAs.  What’s the business model you might ask?  Early indications from DirectBooker are that they are looking at traditional CPC or CPA models.  Additional details about the startup’s plans are available on the DirectBooker website. 

Google captured most of the online travel industry’s headlines this past week as it seeks to “balance” the competing interests of regulators, on the one hand, and intermediaries and direct sellers, on the other hand. As long as traditional search maintains its outsized influence on online travel, the outcome of these discussions will have a significant effect on the industry. Whether AI makes irrelevant this entire controversy remains to be seen – for now.

• • Closed Door Negotiations Produce No Definitive Solution for Google. This past week the European Commission conducted two days of closed door workshops between Google and online intermediaries and direct sellers from the retail and travel industries. At issue were Google’s latest proposals for presenting search results in compliance with the EU’s Digital Markets Act (DMA) (or at least Google’s interpretation of the DMA). Failure to reach a solution will likely lead the EU to impose significant fines against Google.
    
    Two options were presented at the closed door meetings. The first option placed intermediaries at the top of search results where users could open an accordion style listing of the intermediary’s products and services. Under this first option, direct sellers could only place links within the intermediaries’ search results. The second option featured a box (below and separate from the intermediaries) where direct sellers could place links to their products and services. Between the two presented options, direct sellers generally favored the second option though questions around which sellers are featured in the box, how sellers are ranked, how sellers’ content is sourced and how much content can be displayed remain unanswered.
    
    Google’s latest proposals underscore the challenging position that hoteliers find themselves. While Google is understandably motivated to avoid significant penalties under the DMA, its interpretation of the DMA, specifically, the requirement that it not discriminate against competing service providers (e.g., travel intermediaries) is leading it to favor competing intermediaries (e.g., Booking.com / Expedia) over hoteliers, who are owed, at best, an obligation to be treated fairly.

Good Sunday afternoon from Seattle and for those of you celebrating in the United States, a belated Happy Fourth of July . . . A shortened holiday version of our weekly Online Travel Update for the week ending Friday, July 4, 2024, is below. Not surprisingly, this past week was a relatively quiet week in the online travel world. Enjoy.

• • DMA Under Attack. Anyone hoping to see meaningful change to the largest online platforms as a result of the EU’s Digital Markets Act may soon be disappointed. Ongoing trade negotiations between the U.S. and the EU have reportedly included discussions to allow U.S. companies to influence implementation of the DMA’s requirements. Not surprisingly, small online platforms competing against the DMA’s so-called, gatekeepers, are not happy by the rumored discussions. It is unclear how discussions might affect Booking.com – the European travel platform with a U.S. parent.
  • Additional Details on Planned Class Action Against Booking.com. Consumer groups, the Stichting Consumer Competition Claims Foundation and Consumentenbond, are leading the effort and have formally commenced the action by requesting that Booking.com seek a negotiated solution. The groups claim that Booking.com’s parity provisions (which have been previously determined to be anti-competitive in the EU courts) prevent hoteliers from offering lower rates through Booking.com’s competitors (and ultimately driving hotel prices higher). Further details about the claim and the consumer groups’ pitch to get EU residents to join the potential class action are available here.

Have a great week everyone.