Published August 09, 2013
Good news travelers, hotel rooms might get a whole lot cheaper.
As a result of an on-going investigation by the U.K.’s Office of Fair Trading (OFT), the price of booking a hotel room may begin to fall worldwide.
On Friday the U.K. regulators released the first official update on the nearly three-year investigation into two of the world’s largest online travel companies – Booking.com and Expedia.
The probe examined alleged agreements between the two travel companies and hotel giant IHG Group, which controls the Holiday Inn, Crowne Plaza and InterContinental chains. The allegations state that a pricing agreement between IHG Group, Booking.com and Expedia restricts other reservation websites from offering discounts at IHG hotels.
The investigation was prompted by a formal complaint from the small online travel agent, Skoosh.com. The complaint arose when Skoosh.com was forced accept the hotel chain's lower booking commission rates in order to compete with giants like Booking.com and Expedia.
While the smaller company received less of a commission, it could not alter the price of the hotel room due to IHG Group’s strategic pricing model called "rate parity."
The strategy is designed to guarantee that consumers will find a consistent price for a room on whatever booking site they use, but Booking.com and Expedia’s rivals argue that having a set price for all hotel rooms restricts the ability of other web-based travel agencies to offer competitive prices that undercut Booking.com or Expedia.
But all that may be about to change.
The OFT announced that both Expedia and Booking.com have given "formal commitments that would relax restrictions so that [rival] OTAs can provide discounts on the rate which room-only hotel accommodation bookings are offered." Both companies have agreed to new guidelines, which will give other OTAs the chance to offer reductions on hotel room prices.
"The OFT is consulting on whether these commitments offer an immediate and effective means of injecting some meaningful price competition into the online offering of room-only hotel accommodation bookings where, in our provisional view, none may exist," OFT senior director Ann Pope told The Guardian.
While the recent agreement may look like progress, Dorian Harris, founder of Skoosh.com, says the new guidelines may mean very little for consumers.
"What this announcement means in practice is that we will be able to discount room prices, but we won't be able to tell the public about it," he told the Guardian. "The site will just be able to say there is a discount available…This is not a ruling, this is them making a commitment while the investigation is in progress."