Duff on Hospitality Law

With many in the industry getting their first look at Google’s proposed “DMA” changes to European Union search results, many of this past week’s industry headlines were focused on the proposed changes and the industry’s generally unfavorable response.

• • Increased Marketing Efforts by OTAs Result in Fewer Direct Bookings.  In a report issued last week by SHR Group, the hospitality industry technology specialist reports that increased marketing investments by OTAs have begun to shift the share of bookings away from direct channels to indirect channels, have driven higher the costs of brand key word bidding (particularly on meta search sites where costs increased by over 128%) and have increased OTAs’ share of total room nights (largely through OTAs generating longer lengths of stay).   
  • First Impressions of Google’s Proposed DMA Changes to Search.  With the Digital Market Act’s (DMA’s) ban on self-preferencing by so-called “Gatekeepers” set to take effect in early March (March 7), Google has begun rolling out on a limited test basis proposed changes to its EU search results for flights.  The responses have been less than flattering.  Leading the opposition to the proposed changes is online travel platform eDreams Odigeo, which has made quite clear that it believes the proposed changes do not go far enough and warrant enforcement efforts by EU authorities.  eDreams’ concerns have been echoed by other industry groups, including eu travel tech and EU Tech Alliance, which have largely focused on Google’s alleged failure to effectively engage with industry members before moving forward with the changes.  While most of eDreams’ complaints are focused on flights, it claims that similar concerns also apply to the proposed changes for hotels and activities / experiences.  I expect that we may hear from hoteliers soon. 
  • Still Suffering from Rogue Wholesalers’ Abusive Use of Rates and Inventory?  Expedia’s Peter Kern Has a Simple Solution.  Peter’s proposed solution?  Take the issue seriously.  That’s it.  Simple, right?  Speaking at the lodging industry’s annual investment conference, ALIS, Peter Kern (first OTA CEO ever to speak at the long-standing industry conference) expressed surprise that independent and regional hoteliers (noting that many large hoteliers have tackled the problem through solutions offered by Expedia – a plug for Expedia’s wholesale distribution program (Optimized Distribution)) don’t take the issue seriously.  If only it were that easy Mr. Kern. 

It was another slow week in the online travel industry as much of the industry’s attention was focused on this past week’s annual HEDNA Conference (in New Orleans) and preparation for the lodging industry’s first major conference of the year, ALIS.

• Hawaiian and Sabre Settle Things.  Readers of our Update will recall that Sabre sued Hawaiian Airlines for breach of contract back in the summer of 2022.  The suit was in response to Hawaiian’s decision to charge Sabre subscribers a $7.00 booking surcharge and to withhold certain content from Sabre and instead make that content available through Hawaiian’s own direct booking channels or Hawaiian’s NDC-enabled direct connect solution.  Sabre alleged that the decisions violated the terms of the parties’ agreement (which, depending on the date of the agreement, likely required parity among Hawaiian’s booking channels and prohibited the airline from discouraging subscribers’ use of the Sabre platform via surcharges, etc.) and breached the airline’s implied covenant of good faith and fair dealing.  According to Hawaiian, the surcharges and prioritizing of channels was part of the airline’s overall effort to modernize via the adoption of NDC.  Fast forward to last week, and the parties have now filed a formal dismissal of the claims.  No information about the settlement is available yet, but we will update our readers when more information becomes available.    

• European Regulators Seek Information on Booking.com.  Not only is Booking.com expected by many to fall under the Digital Markets Act’s (DMA) “gatekeeper” designation in the coming months, but EU regulators are now exploring whether Booking.com (and 16 other large online platforms and search engines (e.g., Bing, Facebook, Google and Google Maps)) is a “very large online platform” and therefore subject to the many requirements of the DMA’s sister legislation, the Digital Services Act (DSA).  If determined to be a platform under the DSA, Booking.com will be required to use consumer friendly terms and conditions and to provide consumers and regulators transparency with regard to its advertising, recommendation and content practices.  2024 may turn out to be a big year for Booking.com.

This week’s Update features one of several stories published this past week regarding the escalating fight between renegade airline Ryanair and several of the large online travel platforms.  We’ve also included a few stories on GDS platforms – one on Travelport and the other on one airline’s well-documented push to modernize GDS’ (and their users’) practices.  I expect to increase our coverage of GDS this next year, as I anticipate seeing a number of changes coming out of the GDS world over the next year or two.  Enjoy.

• • Ryanair’s OTA War Continues to Escalate.  Readers of our weekly Update are familiar with Ryanair’s ongoing battle with certain major OTAs (primarily Booking Holdings’ various platforms).  In response to recent criticisms by Ryanair over the platforms’ allegedly unjustified fees and charges (or perhaps pending U.S. litigation by Ryanair against Booking Holdings), the platforms (Booking.com, Kayak and Kiwi) have removed entirely the airline’s flights.  According to Ryanair, the airline expected to take a short term hit on revenue as a result of the “pirates” (Ryanair’s term, not ours) actions.  In response, Ryanair intends to make its lowest fares available on its own booking platform and those of “honest/transparent” OTAs.  Is there a lesson here somewhere for hoteliers? 
    
    
  • ASTA Takes (Again) Its Complaints Over American Airlines to the Department of Transportation.  The ongoing battle between the American Society of Travel Advisors (ASTA) and American Airlines continues.  In a December 20 filing, ASTA again asked the U.S. Department of Transportation (DOT) to investigate the airlines’ practices and to require American to restore the travel content that it previously removed (and presumably, made available only to travel agents via NDC connections).  According to ASTA, many of the same problems that existed immediately following American’s transition to NDC in April of last year persist today.  American in turn has argued that ASTA and its members need to modernize and move away from legacy technology (legacy GDS systems). 
    
    
  • Third Party Platforms Voice Their Support for Junk Fee Legislation.  In advance of the U.S. House Committee on Energy and Commerce’s consideration of proposed legislation on resort fees (the legislation passed out of the Committee on a 44-0 vote), the Travel Technology Association (membership comprised of OTAs, GDSs and other platforms) submitted a letter for the Committee’s consideration.  According to Association CEO and President, Laura Chadwick, the legislation will help “reign in their [hoteliers] troubling resort fee practices.”  Interestingly, while the Association favors the proposed legislation, the Association also asked to add provisions holding hoteliers (not the platforms) responsible for failing to display correct resort fee information.  A complete copy of the Association’s letter is available here. 

Happy New Year! We are once again providing a roundup of some of the major developments and trends in the online travel industry that caught our attention this past year. Wishing everyone a successful 2024. 

- Greg Duff

This past week was dominated by stories regarding AI’s application and use in the travel industry (we’ve included only one of those stories) and recent activity on resort fees (two stories this week). Some highlights include:

• • U.S. Supreme Court Disappoints Those Seeking Clarity on Website Accessibility Standing.  Although the court noted in its opinion that the issue of standing remains “very much alive,” the court’s decision on Tuesday finding that the much discussed website accessibility case was moot (and therefore not subject to review by the court) disappointed many.  Will the court’s comments have a chilling effect on future frivolous claims, only time will tell.
    
    
  • Booking Holdings Appeals ETraveli Veto.  In a move that should surprise no one, Booking Holdings has formally appealed the EU Commissions’ veto of Booking’s planned ETraveli acquisition.  Recall that the Commission blocked the planned acquisition on the grounds that the acquisition in one vertical (flights) would further strengthen its already dominant position in another vertical (hotels).  Booking is challenging the Commission’s decision on the grounds that (a) the Commission’s application of the so-called “conglomerate” theory of harm was an unwarranted departure from its well-established merger practices and (b) the Commission’s comparison of the factual situation if the merger went through versus it not going through was entirely wrong.  We will keep you apprised as the case moves forward.
    
    
  • Resort Fee Update – Hilton Sued and Yet Another Bill Proposed in Congress.  Travelers United is at it again.  This time Hilton (after Hyatt and Sonesta) is the subject of proposed class action litigation brought by the group over resort fee disclosures.  Congress is also at it again.  Members of the House of Representatives introduced bi-partisan legislation this past week prohibiting hotels, short term rentals and distribution platforms from excluding mandatory fees from rates whenever they are marketed or displayed.  The American Hotel and Lodging Association announced last week that it supported the legislation applauding the single standard approach across all booking channels.  This latest proposal joins two other proposed bills – The Hotel Fees Transparency Act and the Junk Fee Prevention Act.  We will continue to monitor all three pieces of legislation, which most view (at least today) as having little chance of passage. 

Our weekly Online Travel Update for the week ending December 1, 2023, is below.  This week’s Update features of variety of stories – resort fees, potential new EU traveler regulations and Ryanair’s continued pursuit of OTAs.  Enjoy.

• • New Traveler Rights Proposed in EU. Privacy and data security, competition and now, traveler rights . . .  Our friends at the EU Commission have been busy.  The latest from the EU Commission proposes changes to existing traveler regulations, including free air travel for those accompanying persons with disabilities, deposit limitations on package travel and guaranteed refunds for expired travel vouchers.  We will continue to keep an eye on these proposed changes in the months ahead. 
  • Add Massachusetts to List of States Seeking to Regulate So-Called Junk Fees. Not to be outdone by her contemporaries in California, Massachusetts Attorney General Andrea Joy Campbell announced this past week new regulations requiring hoteliers (and others) to display the “true” price of a night’s stay.  The proposed regulations will now be the subject of a public hearing on December 20, after which the AG can decide whether to move forward with putting the regulations into effect with or without changes coming out of the public comments.  My bet is on the rules becoming effective. 
  • Ryanair’s War with OTAs Continues. In the latest salvo in the ongoing war between Ryanair and OTAs, Ryanair’s CEO called out those OTAs that allegedly charge travelers “unjustified fees and charges.”  OTAs making the illustrious list include Kiwi.com, lastminute.com, Opodo and eDreams.  Ryanair went on to accuse the UK’s Civil Aviation Authority (CAA) and Competition and Markets Authority (CMA) of ignoring OTAs’ “rampant internet piracy and anti-consumer mis-selling.”  Earlier this year, some of the largest OTAs (Expedia and Booking.com) sent letters to these same UK authorities accusing Ryanair of “invasive, unnecessary and unfair treatment” of their customers.  So, what’s the real motivation behind these complaints by Ryanair?  Is it simply a bizarre form of direct booking campaign?   Or is someone finally drawing a line with certain OTAs and calling out their practices?  Are there lessons here for hoteliers?
  • Who Says Amazon Isn’t into Travel?  Just ask American Airlines, IHG, Choice and Carnival Cruise Lines, all of which participated in Amazon’s self-proclaimed first-ever Cyber Week Travel Deals.  Users interested in the marketed offers were re-directed to the applicable supplier’s website to complete the booking.   

With the U.S. holiday, this past week was definitely a quiet one.  Enjoy.

• • Stories Continue to Emerge About Booking.com’s Ongoing Fraud Challenges.  For several weeks now, we’ve included several stories about Booking.com users being asked (fraudulently) to provide bank card details to preserve their previously made bookings.  To date, most of these stories have come out of Asia.  Now we have a story out of the UK, where Booking.com users are now receiving emails from Booking.com encouraging them to cancel their cards because of suspicious activity.  To date, Booking.com has blamed the systems of their supplier partners for the apparent fraud.  That may now be changing.
    
    
  • Hubli Offers Real Time Meeting and Event Inventory. Those of you who have seen my group sales presentations know that I dedicate a portion of the presentations to online meetings and events.  I remain convinced that one of the large leisure booking platforms will one day master group bookings – either through its own in-house creation or acquisition of another smaller niche player.  While the large leisure platforms remain on the sidelines, the smaller platforms press ahead with their own solutions.  This week, Hubli announced that it has launched direct API connectivity (“Venue Connect”) that allows properties to offer real-time meeting and event inventory.  According to Hubli founder and CEO, Ciaran Delaney, Hubli is already working to build direct connections with several supplier partners.

After a few incredibly busy weeks in online travel, this past week was relatively quiet.  Enjoy.

• • Booking.com Launches Cruises in the U.S.  For years now, we’ve featured stories in our weekly Update detailing the many challenges of booking cruises online.  The multitude of available sailings, cabins, pre and post accommodations, excursions, etc. were always referenced when explaining why cruises would never fit well on traditional online booking platforms.  Booking.com seems committed to change that.  Last week, Booking.com began offering cruises to U.S. users through a white label cruise site with cruise agency, World Travel Holdings.  A similar partnership with Priceline already exists.  Users of the new platform will be able to select from over 10,000 sailings, and customers booking on the new platform will find exclusive offer and be eligible to receive shipboard credits of up to $1000 (depending on amount spent to book the cruise).  World Travel Agents will handle the bookings (which will be made via phone), customer service and customer emails. 
    
    

• • Airbnb May Look (Again) to Hotels to Fill Accommodations Demand.  Faced with a regulatory crackdown that has slashed the number of its NYC rental listings, Airbnb may soon turn to boutique hotels to fill the gaps.  Airbnb CEO, Brian Chesky, reported in last week’s earnings call that boutique hotels presented “a real opportunity” for addressing the recent regulatory changes.  Readers of our Update will recall that Airbnb went down this hotel road before – even going so far as to create a special category for hotels on its platform- but that it ultimately dropped the effort with the onset of the pandemic.  Since that time, it has been difficult to discern whether Airbnb viewed hotels as a real opportunity.  We will have to wait and see whether this latest effort by Airbnb is different than the past. 

For those of you who I saw in Long Beach this past week at the HSMAI Sales Forum, it was great to see you. 

It is earnings season, which makes for a longer Update than usual:

• • Expedia Enjoys Strong Third Quarter Results.  While I am still working my way through the recent Expedia Group earnings call transcript, news of the recent quarter has been uniformly positive.  Expedia reported strong results (quarterly records in both revenue and EBITDA and a third quarter record in gross hotel bookings ($18.5 billion)) and even stronger results for its growing B2B business ($995 million in revenue, up 26% year over year and a quarterly record).  During the third quarter earnings call, Expedia CEO, Peter Kern, was optimistic about the prospects for the platform’s business now that its unified loyalty program OneKey and technology platform is complete.
    
    
  • Booking Holdings Also Enjoys a Strong Third Quarter.  Expedia’s largest competitor, Booking Holdings, also enjoyed a record third quarter.  Booked room nights and gross booking value ($39.8 billion) set new quarterly records.  Beyond hotel room accommodations, flights featured prominently in Bookings’ third quarter results with the platform selling 9 million flights during the quarter.
    
    
  • Google’s Anti-Trust Trial:  The Gift That Keeps Giving.  Over the past month, we have featured multiple stories detailing the testimony of various OTA executives at the ongoing Google anti-trust trial.  This past week, the comments of Expedia Group Chairman (and outspoken spokesman), Barry Diller, surfaced in the ongoing proceedings.  According to the reports, the comments were made by Diller back in 2019 when he claimed that he was “on the edge of a revolt” over Google’s increased monetization (e.g., paid display advertising) of its search results.  According to Diller, the increasing numbers of paid ads was punitive to Expedia and anyone else relying on a level search playing field. 
    
    
  • Another Week and Another Story on Scammers Leveraging Booking.com’s Messaging Platform.  This week’s story comes to us from Singapore.
    
    
  • IHG’s Attribute Based Bookings Are Here.  While IHG’s effort to offer guests attribute-based booking functionality has long been the subject of industry reports (including our own Update), it appears that the functionality is now available, with new functions coming.  Through the IHG app, guests can now book rooms based on their location and view.  IHG hotels will soon also be able to offer add-ons (e.g., prepaid parking, food and beverage credits) to guests booking on the app.  According to IHG, offering these attributes presents an entirely new revenue opportunity for its properties.  It will be interesting to watch how third party platforms respond to attribute based bookings and pricing, which present an entirely new meaning to rate and availability parity.

Have a great week everyone. For those of you attending next week’s HSMAI Sales Leader Conference in Long Beach, I hope to see you there.  I will be presenting at the sales leader roundtable.

This week’s Update features updates on several recently featured stories, including Booking.com’s ongoing payment and fraud challenges and new legislative efforts to limit junk fees.

• • OTAs Raise Issues with Airlines’ Aggressive Tactics.  Online travel agents, On the Beach and UK Holidaymakers, have raised objections with the UK’s Competition and Markets Authority (CMA) over the aggressive tactics of Ryanair (and other discount airlines) to push travelers to book direct.  According to the paper presented to the CMA and UK government, discount airlines are harming consumer choice by blocking sales of certain products (seat-only offerings), charging excessive OTA fees and delaying refunds.  The OTAs are asking the UK competition authority to mandate that airlines provide with fair access to products and services and create a code of conduct for airlines and their OTA partners.  Really?
    
    
  • Citi and Navan Announce Partnership.  Further to my comment in last week’s Update about the explosion of interest in small and medium businesses (SMB), Citi and Navan announced this past week a new partnership under which the parties will offer a travel and expense solution for Citi’s Commercial Bank cardholders.  For those companies that provide Citi cards to their employees, the new solution will provide services that rival competitors SAP Concur and Egencia.  With the deal, Citi will be well positioned to grow its commercial card member base by offering travel and expense services.  

For those of that attended the recent Georgetown hospitality law event, it was great seeing so many of you in person.  Have a great week everyone.