Following on from its sector-wide investigation into accommodation booking platforms’ practices, the Competition and Markets Authority (CMA) has published its concerns and principles which it expects online accommodation booking websites to apply.
The CMA has set a deadline of 1st September 2019 for businesses to comply with the principles. Failure to do so may result in enforcement action by the CMA.
What are the CMA’s concerns?
The publication highlights the following issues regarding practices in the industry:
- A failure to disclose information to consumers regarding the factors that influence the ranking of search results in booking platforms, in particular in relation to the profitability of the items ranked in the search results for the platform provider.
- The use of misleading reference-pricing practices, in particular in relation to comparisons between prices which are payable in different circumstances (such as booking dates) and comparisons with offers bookable on other websites.
- The misleading presentation of prices, in particular a failure to include unavoidable fees, charges and taxes that are reasonably calculable in advance in the total price up-front.
- The use of misleading statements about the popularity and availability of accommodation.
The publication contains a number of principles, some of which are summarised below, which the CMA expects businesses to comply with in order to address the concerns and lessen the risk of breach of consumer protection laws.
The CMA sets out that there are various practices within the accommodation booking platform industry which may mislead consumers by, for example not providing all of the relevant information in order to help the consumer to make an informed decision. Providing information in a clear and prominent manner is a key theme throughout the principles, with the principles setting out requirements as to how and when the information should be provided.
Platform providers may therefore wish to review the publication and compare it against its own practices and processes with a view to updating such practices and processes wherever necessary.
Provision of information if search results are ranked by profitability
According to the CMA’s study, consumers typically believe that the results on comparison sites are unbiased but some platform providers rank their search results based on factors such as the profitability (e.g. the level of commission) of the results for the platform provider.
The CMA therefore requires that, if profitability affects the ranking of search results in the booking platform, the platform provider should explain this to the consumer without the consumer having to take any action (such as via a hover over text box) in clear and prominent static text on the webpage, either before the search results are presented, or on the same webpage on which the results are presented.
Requirements in relation to drawing comparisons on price
In the CMA’s view, comparing the price of accommodation services to a higher price, which does not reflect the genuine and underlying value of the accommodation services, can cause consumers to overvalue the accommodation and potentially pay a higher price than they would otherwise.
The overarching theme of the publication in relation to price comparisons is that they must represent a genuine discount saving for consumers and, more specifically, where comparisons on price are drawn, the platform provider should clearly and prominently identify and differentiate between the relevant features of the two offers and not use words such as “reduced” or “10% off” unless this requirement is fulfilled.
Requirements in relation to the presentation of prices
The CMA has found that, in some cases, platform providers do not provide consumers with the total price of the accommodation services up front. For example, certain compulsory taxes would only appear after the consumer had taken certain steps towards booking the accommodation.
It is clear from the publication that the CMA is seeking to tackle this by ensuring that, as far as possible, the total price the consumer pays is the price that is displayed in the search results. For example, the publication requires the total price of the accommodation services to include all compulsory taxes, charges and fees that are reasonably calculable based on the search criteria of the consumer.
Requirements in relation to popularity and availability statements
The CMA found that popularity and availability statements such as “X other people are viewing this property right now” or “destination X is Y% booked for your travel dates” are used on platforms to varying degrees.
The broad theme of the principles in this area is that these statements should not mislead consumers or create false impressions (such as artificially creating the impression that the accommodation is rare or scarcely available) and that the platform providers should put in place certain mechanisms to police these statements with a view to ensuring that consumers are not misled.
For example, the CMA requires statements to be clear, disclose any assumptions, limitations and qualifications that are relevant to the statement and be substantiated by the hotel booking website’s data. The requirement for substantiation may indicate the CMA’s intention that platform providers should not only comply with the principles but also be able to prove that they have done so.