Duff on Hospitality Law

Good Sunday morning from Seattle . . . Our weekly Online Travel Update for the week ending Friday, April 24, is below. It was another interesting week at Booking.com (second in a row) as it faces yet another competition law inquiry – this time from Italian competition authorities over the preferential treatment provided properties in Booking.com’s preferred program. AI regulation also features prominently in this week’s Update as regulators press ahead with restrictions on technology based or assisted pricing. Enjoy.

• • Another Week; Another AI Partnership Announcement. The AI arms race continues. This past week featured another newly announced “AI partnership” between an established intermediary and a large AI platform. This week’s announcement came out of TripAdvisor - one of the very earliest intermediaries to announce an AI partnership with Perplexity. This time TripAdvisor has partnered with Anthropic to make its hotel and experiences inventories available to users of Claude. Claude users can now summon TripAdvisor content by identifying Viator or TripAdvisor as their travel partner. When users are ready to book recommended travel, Claude re-directs them back to TripAdvisor to complete the booking. TripAdvisor also announced last week an expanded partnership with Amazon to assist users of Amazon’s Alexa+ to build travel and modify travel itineraries via voice.
  • OpenAI Adopts Familiar Advertising Pricing Model. According to third party sources, OpenAI has adopted a widely used search advertising payment model – pay per click (PPC) – for its AI chatbot, ChatGPT. Pay per click is the same model used by Google and has become the online marketing industry’s standard. What is a ChatGPT generated click really worth? The market will soon tell us. According to several sources, travel advertising is now routinely appearing on ChatGPT with, wait, you guessed it, OTAs, absolutely dominating the platform (Expedia, Booking.com and Airbnb featured in over 80% of the noted ads). What triggers these ads and to what extent are they tied to specific indicia of users’ intent remains to be seen.
  • Booking.com’s Preferred Program Under Scrutiny. To what extent is a program that allegedly values the commissions paid by suppliers over other consumer oriented factors (quality or value) anti-competitive? That’s the question now before Italian regulators. We will keep an eye on this one. Perhaps regulators will also address the question of what value is a program the purports to offer preferred placement if every competitor is effectively “required” to be part of the same program? What does “preferred” really mean?
  • AI Regulation on the Horizon? For some time now my answer to the often repeated question, “What AI regulations apply to my hospitality operation?” has largely been the same. Not many. Outside the possible use of AI systems in certain “high-risk” decision making (almost exclusively in the employment context for most hospitality operators) or such systems’ access and use of personal information, most of the AI regulations (even outside the U.S.) proposed or adopted over the past few years have had little application. That may soon change. Possible changes in the EU and at the state level may introduce a new era of regulation. At the top of legislators’ and regulators’ minds? Algorithmic or technology assisted pricing. While Maryland’s first of its kind anti-surveillance pricing legislation may specifically exempt the kind of widely used loyalty program or membership pricing often used in the hospitality industry, not all states considering the issue may include similar carve outs.

Have a great week everyone.