FOXNews.com: New pricing guidelines may make hotel booking cheaper

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New pricing guidelines may make hotel booking cheaper Aug 9th 2013, 14:47 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. The new guidelines that Expedia and Booking.com have agreed to are: 1.) OTAs would be free to offer reductions off headline room rates, for example by way of discounts, vouchers, rewards and/or cash back, funded by their commission revenue or margin to 'closed groups', for instance in the context of membership or loyalty schemes. Eligibility for such discounts would be dependent on the end-user making the booking having joined the closed group and having made a single previous booking (which is/has become non-refundable) after the effective date of the commitments of any hotel room with that OTA. 2.) OTAs would be free to publicize information regarding the availability of discounts in a clear and transparent manner, including to price comparison websites and meta-search sites (that is, to members and non-members); however, OTAs cannot publicize information regarding the specific level of discounts for any IHG hotel room to non-members (for example, the amount/percentage discount offered which would allow a discounted rate to be calculated). Similarly, other (non-IHG) hotels may prevent OTAs from publicizing information regarding the specific level of discounts for a particular hotel room to non-members. If an OTA and IHG/any other hotel partner agree or have agreed to a contractual right for IHG or any other hotel partner to match a Reduction displayed to consumers who are non-members, the commitments shall not restrict the enforceability of that right. 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."

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