Startup Seeks to Turn Traditional Group Booking Upside Down
(“Booking Startup Stayker Makes Room Blocks Less Risky for Planners,” Skift Travel News on Nov 20, 2019)
Launched last Thursday, Stayker seeks to disrupt traditional group sales and contracting. Rather than rely on traditional room blocks and all that they entail (e.g., room revenue commitments, cut-off dates and attrition), meetings planners using Stayker would bypass the entire rooms negotiation process (and related uncertainties) and instead offer their attendees a link to the new online booking platform. Attendees using the platform would then be able to view all available room inventory in the area (from multiple properties) and book wherever (and whenever) they want at the current rates (no negotiated group rates.) Should such a platform catch on, the group segment (and its associated revenue) could change dramatically. Group bookings would cover food and beverage and meeting space only. Hotels seeking to house group attendees would compete on an area-wide basis and market and promote their inventories (once again) through a third-party online intermediary. It will be interesting to see whether meeting planners embrace this new model. Stay tuned.
Vrbo Repositions Itself
(“Expedia’s Vrbo to Reposition Itself Beyond Vacation Rentals as a Family Travel Business,” Skift Travel News on Nov 14, 2019)
Fresh from its disappointing third-quarter financial results, Expedia Group’s recently announced “repositioning” of Vrbo may be just what the doctor ordered. Earlier this month, Vrbo’s new general manager, Jeff Hurst, announced that Vrbo (Expedia’s short-term rental platform) plans to reposition itself as a family travel site offering vacation products and services (e.g., resort accommodations, in-stay services, etc.) beyond short-term rentals. Expedia provided few details about the new platform and no timeline for the planned repositioning.
Algorithms Under EU Scrutiny
(“Algorithms might raise collusion concerns, Franco-German study says,” MLex Insight on Nov 8, 2019)
As many of you probably already know, algorithms are the heart and soul of most online travel booking platforms (if you doubt me, just try asking for details about property rankings.) The antitrust authorities from Germany and France recently released a joint study examining the effects of algorithms on competition. In particular, the study focused on the relationship of pricing algorithms and horizontal collusion, and how the market dominance of certain platforms (including online travel agencies) may affect the algorithms used. If anyone would like a copy of the study, please let us know.
Indian Online Travel Agent Joins Ranks of Those Being Investigated for Potential Consumer Abuses
(“MakeMyTrip faces battery of allegations of unfair business practices following merger,” MLex Market Insight on Nov 1, 2019)
Indian (and Nasdaq listed) online travel agency (OTA) MakeMyTrip is the latest online travel platform to face scrutiny over allegedly questionable business practices. The Competition Commission of India (CCI) has ordered an investigation of the OTA following receipt of a complaint from the Federation of Hotel & Restaurant Associations of India (FHRAI). The FHRAI complaint contains a number of allegations that should be familiar to our readers – market dominant position (63 percent of domestic online market), excessive commissions (22-40 percent) and broad rate and availability parity requirements. Findings from the investigation are expected in four to five months.
Japanese distributor Rakuten leads off this week’s Update with a story detailing the circumstances leading to the distributor’s recent commitment to abandon all contractual parity requirements. Enjoy.
It’s Official: Rakuten Eliminates All Parity Requirements
(“Travel platform Rakuten becomes first firm in Japan to commit to remedies by eliminating parity clauses,” MLex Insight on Oct 25, 2019)
Japan’s Fair Trade Commission (JFTC) announced this past Friday that Rakuten (Japan’s largest domestic online travel platform) has officially committed to remove all rate and availability parity obligations in its contracts with the nearly 33,000 hotels listed on its site. The commitment will run for three years, at which point Rakuten’s industry position will be re-examined. It’s unclear what effect Rakuten’s commitment might have on Booking.com or Expedia, both of which were part of the JFTC’s investigation that began in April with raids on each distributor’s Japanese offices.
This week’s OTA Update leads off with stories about two of the largest OTAs seeking to diversify their offerings through the addition of flights. As each of these travel platforms continues to evolve and seek to add more products and services, it won’t be long until there will be little to differentiate them. Enjoy.
Booking.com Takes Off (Literally)
(“Booking.com Launches Flights Through Partnership Across Europe,” Skift Travel News on Oct 15, 2019)
As further evidence of Glenn Fogel’s planned evolution of Booking.com into a full-service travel platform, Booking.com rolled out this past week standalone flight offerings to travelers in the United Kingdom, Germany, Italy, Spain, Ireland, Austria, Belgium and the Netherlands. Travelers previously seeking airline tickets in these countries (and still today in other locations) were re-directed to sister metasearch site, Kayak, where travelers were then re-directed to other OTAs or the airlines themselves for booking. Now, travelers in the eight listed countries can book flights directly on the Booking.com website/application through Swedish travel partner eTraveli (though some travelers are re-directed to eTraveli’s site Gotogate to complete the booking.)
This week’s OTA & Travel Distribution Update features a number of stories on recent changes at Google with regard to the way in which it displays vacation rentals and the market’s response to those changes. Enjoy.
“Alexa, find me tickets to…” Destinations Go Vocal
("How destinations might soon have a voice via Amazon and Google," Phocus Wire on Oct 11, 2019)
Meet Simpleview. The UK-based digital agency that specializes in the tourism industry is building (beta version is expected by year end) one of the first destination-focused applications for Amazon Alexa and Google Home. When finished, the application will allow users to search third-party destination information (e.g., activities, dates and times) via their voice-activated devices.
Welcome to our inaugural issue of Foster Garvey’s OTA & Travel Distribution Update. On October 1st, 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.
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
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.