Duff on Hospitality Law

Good Sunday morning from somewhere over Colorado . . . Our weekly Online Travel Update for the week ending Friday, June 21, 2024, is below. It was another relatively quiet week in the online travel space, except, that is, if you are Booking.com (or its parent, Booking Holdings). It has been a tough couple of weeks for the large OTA. Enjoy

• • When All Other Strategies Fail. It has been a tough couple of weeks for Netherlands based Booking.com. As the fallout of Booking.com’s recent gatekeeper designation under the EU’s Digital Markets Act (DMA) continues to unfold (including this past week’s announcement that it was abandoning all parity provisions for European hotels), an exasperated Glenn Fogel had little left to say other than that the EU’s rules were “dumb.” I’m sure we’ve all had weeks like that.

Have a great week everyone. I look forward to seeing many of you at the HSMAI event in Charlotte this week.

It was a busy week in the online travel world as evidenced by the number of our stories. Enjoy.

• • Cruise Operators Prepare for Total Pricing.  The recent announcement by some of the largest cruise companies to provide passengers total pricing (inclusive of all fees) underscores the breadth of California’s recently enacted pricing transparency law.  It isn’t just hoteliers and ticket agencies that need to comply.  Rather than limiting this change to California (or more properly, California consumers), the cruise companies plan to rollout total pricing nationwide.  The announced changes will go into effect on July 1, 2024.
    
    
  • ADA Booking Accessibility Rules at Issue in Recently Announced Marriott Settlement.  Federal prosecutors in Colorado announced last week a landmark settlement with Marriott over the booking of accessible rooms across the Marriott portfolio.  At issue were Marriott hotels’ alleged failure to provide needed detail about ADA accessible hotel rooms and the inability (prior to October 2022) to guarantee an ADA accessible room through Expedia.  As part of the settlement, Marriott has agreed, among other things, to list all of its accessible rooms through its centralized booking system, to provide details about each accessible room, to make accessible rooms available through the largest online travel agents (Expedia and Booking.com) and to allow Marriott Bonvoy members to book accessible rooms with points. The Colorado settlement agreement (a copy of which is embedded in the attached Skift article) will likely serve as a baseline for future enforcement and compliance efforts (similar to Marriott’s settlement with Pennsylvania regarding mandatory fee disclosures).  I’d encourage everyone to read it. 
    
    
  • OTAs Make Push for Corporate Travelers.  It should come as no surprise to our readers that the largest online travel agents (those that historically have focused primarily on leisure segment) are making huge pushes to capture a portion of the corporate travel segment, particularly in the SMB arena.  This recent trend is on top of efforts by other platforms to build better managed travel platforms (booking, payment, expense management, loyalty program recognition) – in many instances bypassing legacy GDS connections. 
    
    
  • Advocate General Questions Necessity for Parity Provisions.  In a precursor to an expected decision by the EU’s highest court, Advocate General Anthony Michael Collins suggested that Booking.com may find it difficult to prove that its controversial parity provisions are “indispensable” and “proportionate” to it maintaining its economic viability and thus exempt from EU competition law.  The preliminary opinion stems from a Dutch court case brought by German hoteliers seeking damages for Booking.com’s use of the illegal (at least in Germany) parity provisions.  Also at issue in the case is the definition of the relevant market for purposes of assessing the disputed clauses.  According to the Advocate General, the market needs to be viewed from the eyes of hoteliers and consumers (and not necessarily the eyes of the distributor).  Although not binding on the EU court, the opinions of advocate generals are often followed. 

This week’s Update features a variety of stories – STRs, algorithm leaks and Hilton campgrounds (sort of):

• • Las Vegas Price-Fixing Case Is Appealed.  A few weeks ago we reported on a Nevada federal district court’s (second) dismissal of a class action case brought against Las Vegas’ hoteliers’ over their use of certain Cendyn revenue management tools.  Not surprisingly, the plaintiffs have now appealed the court’s dismissal to the Ninth Circuit, the first such appeal of the several algorithmic cases currently pending against hoteliers.  A decision by the appeals court is not expected until 2025.
    
    
  • Booking.com Focused on U.S. STRs.  When it comes to short term rentals (STR), European online travel agent Booking.com is now taking a U.S. first approach.  During the first quarter of 2024, STRs accounted for 36% of all bookings on the platform.  To appeal to U.S. consumers, Booking is particularly focused on payments, liability insurance and its damage policy.  Families (however defined) are making up a larger and larger portion of users interested in STR bookings.
    
    
  • Air France – KLM Again Delays Introduction of GDS Surcharges for TMCs.  Fourth time the charm?  Air France – KLM has announced a further delay in its planned introduction of a €21 surcharge for corporate bookings made via legacy GDSs.  Why the additional delay?  Perhaps a lesson learned from American Airlines aggressive approach?  According to the airline, the delay is needed to resolve “issues” and to “support our partners.”  Last summer the airline removed all short-haul flights from GDS channels, reserving those routes for NDC connections.
    
    
  • Hilton RVs Officially Launched.  This one is of personal interest.  Not actually “Hilton” RVs, but close.  Users of Hilton’s booking channels can now search and book accommodations (RVs, tents, etc.) at several AutoCamp locations (Yosemite, Russian River, Cape Code, Joshua Tree, etc.).  Hilton Honors members can also earn and redeem points for their AutoCamp stays.  Having been part of similar efforts in the last few years, I can only imagine the discussions within Hilton as it considered the effects of adding this new non-hotel inventory to its regular online offerings – OTAs, wholesalers, loyalty program, etc. 

American Airlines’ decision to soften its approach on distribution with travel agents and advisors garnered most of the industry’s attention this week.  Otherwise, the holiday week for many was relatively quiet.  Enjoy.

• • Another Quarter and Another Staggering Amount Spent on Sales and Marketing.  According to their first quarter financials, the “Big Four” online travel agents (Expedia Group, Booking Holdings, Airbnb and Trip.com Group) spent a staggering $4.08 billion in sales and marketing in the first quarter of this year (a 10% increase over the same period last year).  How do these amounts compare to companies outside the online travel industry?  In the first quarter, the Big Four outspent their industry counterparts by a factor of 4 – when measured as a percentage of overall revenue (9.2% vs. 37%).     
  • A Few More Carrots Than Sticks:  American Airlines’ About Face.  Facing cuts in its financial forecasts, American Airlines announced this past week that it was moderating its historically aggressive NDC rollout.  According to American CEO, Robert Isom, the airline’s financial misses were due, in part, to its misguided sales and distribution strategy.  Going forward, American will seek to incentivize agencies’ and advisors’ use of its NDC platform as opposed to penalizing those who don’t.  As part of its newly announced change, American is reversing one of the most controversial aspects of its NDC campaign, the withholding of American Advantage loyalty benefits on bookings made through non preferred NDC advisors.   
  • Travel Technology Association Holds Its First Policy & Innovation Showcase.  Members of the Travel Technology Association held its first Policy & Innovation Showcase this past week for members of Congress and the media.  Companies presenting and/or hosting this event included Sabre, Airbnb, Tripadvisor, Expedia, Booking Holdings, Amadeus, Travelport and Chase Travel Group.  Issues currently on the Association’s agenda include the reform of the Communications Decency Act (Section 230), the American Privacy Rights Act and ancillary fee transparency.  According to comments by Association CEO Laura Chadwick, all travel companies are becoming technology companies. 

This week’s Update features a variety of stories, including interviews with two of the online travel industries major influencers, Ariane Goren of Expedia and Drew Pinto of Marriott.  I hope you enjoy. 

• • American Airlines’ War with Tour Operators Continues.  Responding to American Airlines’ newly (on May 13) enacted policies on cancellations and re-bookings, Tauck advised travel advisors this past week that it had stopped booking travel with American Airlines and other Oneworld members (including British Airways, Japan Airlines and Qantas).  The policies in question impose a $50 cancellation fee on cancellations beyond the 24-hour booking window and a $50 cancellation / re-booking (aka churn) fee on two or more churns.  
  • Southwest’s Distribution Evolution Continues – Flights Will Now Appear on Google Flights.  It was just last week that we featured a store detailing Southwest’s new partnership with Chase Travel, the first ever by Southwest to feature its flights on a third-party consumer facing booking platform.  Now, Southwest is moving to Google.  As of Wednesday last week, Southwest’s flights are now featured alongside other airlines on Google Flights.  Flights must still be booked directly with Southwest on the airline’s website.
  • Lotte Card Is the Latest Financial Institution to Launch a Travel Platform.  Joining the likes of Chase and Capital One, Korean card issuer, Lotte Card (9.35 million cardholders), has announced the launch of a new travel portal offering cardholders the opportunity to search and book accommodations, flights and car rentals.  The new platform will be powered by Hopper’s B2B division, Hopper Technology Solutions (HTS).
  • Hoteliers and Real Estate Information Firm Seek Dismissal of Anti-Trust Case.  In one of several algorithmic price-fixing cases targeting the hospitality industry, the defendants (six hoteliers and CoStar) moved last week to dismiss the claims, arguing that there was no evidence that the defendants had conspired to fix prices through the hoteliers’ use of CoStar’s (STR) long-used benchmarking tools.  As we noted in last week’s Update, a similar price-fixing case against Las Vegas casino / hotel operators was recently dismissed. 

Booking.com’s “gatekeeper” designation under the EU’s Digital Markets Act (DMA) and artificial intelligence’s increasing influence on online travel garnered much of the attention this past week.  Enjoy.

• • Chase Scores Major Win with Southwest Airlines.  Want to get away?  Chase Travel has a solution.  Chase Travel is the only online platform (not competing card companies or the major OTAs) to offer Southwest flights to online leisure bookers.  For years, Southwest subscribed to a direct channel only distribution strategy, but lately that strategy has been changing – albeit in small increments.  Does Southwest’s arrangement with Chase signal even greater future availability of Southwest flights on public online channels?  Only time will tell. 
  • Both Google and Expedia Announce New AI-Powered Trip Planning Tools.  At this past week’s annual Google developer conference, Google announced new and/or improved AI-powered trip planning tools for both Google Gemini  (the paid version of Google’s AI chatbot) and traditional Google search (through AI Overviews).  AI Overviews will be available to all Google search users this week, while the new Gemini tool will be available this summer.  Expedia also introduced AI-powered tools this past week at its annual Expedia Explore event.  New CEO, Ariane Gorin, speaking at her first Expedia Explore event, introduced Romie, Expedia’s new AI travel assistant that can help travelers with planning and booking travel.  What role will paid display advertising, key words and commissions play in these new tools?  Google hasn’t said.  When asked about the effect of commission levels on Romie, Expedia, CTO Rathi Murthy, said only that commissions don’t play a role – today.  Time for everyone to start thinking more broadly about search . . . and appropriate limitations.     
  • Booking.com Is a Gatekeeper.  Now what?  In today’s Update, we provide a number of perspectives on the EU Commission’s recent designation of Booking.com as a “gatekeeper” under the Digital Markets Act (DMA) for its online intermediation services.  With the EU Commission’s announcement, Booking.com now has 6 months to comply with the DMA’s applicable requirements.  In 6 months, Booking.com must submit a written compliance report detailing how it complies with the DMA requirements.   Other DMA obligations, including those associated with any merger or acquisition that Booking.com might wish to make, apply immediately.  In the months ahead, hoteliers should expect to hear from Booking.com as to how it intends to comply with the DMA’s requirements and how compliance will affect their existing distribution agreements.  Stay tuned. 

Our weekly Online Travel Update for the week is below. And for those mothers out there, we hope you had a great Mother’s Day! This week's highlights:

• • Las Vegas Hotels Earn Dismissal of Algorithmic Price-Fixing Case. One of the first of now several algorithmic pricing-fixing class action suits brought against members of the lodging industry was dismissed last week by a Nevada federal district court. Defendants in the case included Cendyn (relating to the co-defendants’ use of Cendyn’s revenue management tools GuestRev and GroupRev), Blackstone, Treasure Island, Caesars and Wynn. In dismissing the case, the federal court judge held that the claimants “have not plausibly alleged a tacit agreement between Defendants or a restraint on trade in part because Hotel Defendants are not required to and often do not accept the pricing recommendations generated by Cendyn’s products.” Click here for a complete copy of the court’s order dismissing the case.
    
    
  • Is Airbnb Considering a Subscription Model? In a recent Skift interview, Airbnb CEO, Brian Chesky, noted that he favored (and had been considering) a paid membership or subscription program versus traditional points-based loyalty programs. Loyalty and the possibility of an Airbnb loyalty program have been talked about for years – dating back to comments by Chesky in 2016. The key question for many is whether Airbnb and its still unique product offering would even benefit from offering such a program, which can be an expensive endeavor.
    
    
  • Federal Investigation of Airlines’ Loyalty Programs and Co-Branded Credit Cards Continues. A few weeks ago, we featured a story detailing an ongoing investigation by the US Department of Transportation and Consumer Financial Protection Bureau into airline loyalty programs and relatedly, their co-branded credit cards. A hearing on the issue was held this past Thursday and notably, none of the major airlines (nor their trade association) participated (though their loyalty programs were the subject of much of the discussion). Discounts carriers Sprint, Allegiant and Breeze participated in the hearing. Topics covered during Thursday’s hearing included the role airline loyalty programs may play in preventing competition in the market and the effect of airlines’ practice of devaluing miles.

This week’s Update again features a wide variety of stories, including an important update on the much beleaguered spokesman for metasearch site, Trivago.  Enjoy.

• • Google Again Delays Demise of Third-Party Cookies.  Good news for online marketers using third party cookies via Google Chrome.  Google has again delayed its planned elimination of third-party cookies – this time until early 2025.  Google’s recent announcement is the third such delay since announcing in 2020 that it would be eliminating third party cookies within two years.  Google attributes its latest delay to two primary factors – (1) advertisers, which have been up in arms over the planned elimination and its likely effects and (2) regulators, primarily the UK’s Competition and Markets Authority (CMA), which has expressed concern over the elimination and its potentially anti-competitive effects. 
  • Sustainable Travel Options Not As Important As Originally Thought?  For several weeks now, we’ve featured stories detailing online travel platforms’ sustainability efforts.  Now comes a report from Booking.com suggesting that sustainable travel options may not be that important to travelers.  In short, while the majority of travelers (84%) may say that having and making sustainable travel choices may be important to them, it isn’t a priority.  In fact, many of the survey’s respondents (28%) reported that they are weary of even hearing about climate change.  Approximately a third of the respondents reported that they thought that climate change damage had already occurred.  As for who should bear responsibility for doing something about climate change, almost half responded that governments (44%) or travel companies (43%) should be responsible (and not individual travelers).  The Booking.com survey results mirror many of the findings of other research in the area, including a survey conducted earlier this year by Phocuswire. 
  • Instant Online Group Bookings – Fact or Fiction?  For those of you who have been to one of my presentations on online distribution, you know that I typically end my presentation with a brief overview of what we see in the distribution world in the months or years ahead.  For several years now, online group bookings (and online group booking tools) have made our list.  But now, years after the somewhat anticlimactic introduction of many of these online tools and platforms – think Bizly, Groupize, CVENT’s Instant Book and lodging industry backed Groups360 (as well as the many direct booking tools introduced by many of the large lodging operators) - the future of online group bookings may be farther away than we first expected.  According to a recent survey by Business Travel News (BTN), there are several factors hindering the option of these online platforms – among them (1) the inherent power and benefits of legacy RFPs, (2) lack of appropriate inventory and (3) company procurement guidelines requiring competitive bids.   

This week’s Update features a variety of topics – sustainability (x2), airline loyalty programs, NDC and direct booking campaigns (among others).  I hope you enjoy.

• • DOT Announces Hearing on Airline Frequent Flyer Programs.  Last week, the US Department of Transportation (DOT) announced plans to co-host (with the Consumer Financial Protection Bureau) a hearing on May 9 on airline loyalty programs (and associated airline cobranded credit cards) as part of its ongoing investigation into airlines’ alleged deceptive trade practices.  According to a statement issued by the agencies, the hearing will provide an opportunity for the agencies to “gather more information for determining if additional action is needed to ensure fair competition in these industries and a fair and transparent experience for passengers and cardholders.”  Among the areas of interest for the agencies are (1) the practices around booking award tickets, (2) the devaluation of miles over time, (3) the transferability of miles and benefits and (4) the notice given to travelers when program changes occur.  Notably, not one of the major airlines or their cobranded card partners will testify at the hearing.  As in years past, the results of this effort could prove instructive to hoteliers with regard to their own loyalty program and co-branded card practices.  
  • Hotelbeds Delays IPO.  Global wholesaler Hotelbeds has reportedly delayed its IPO ambitions until late 2024 or early 2025.  According to reports, the delay is an attempt to achieve an even higher valuation (higher than the expected $4 billion valuation if Hotelbeds had gone public this summer). 
  • Google and Expedia Announce New Sustainability Features.  In separate announcements this past week, both Google and Expedia announced new features and products to allow travelers to better identify and book (Expedia) more sustainable travel.  On Wednesday, Google announced that it was adding new tools to its Maps, Search, Flights and Hotels products to help travelers identify more environmentally friendly travel options.  These latest tools are in addition to Google’s already existing (and widely used) carbon emissions estimate technology.  Expedia announced the launch of two programs to assist DMOs in promoting sustainable tourism and more environmentally friendly travel options.  The first program,  Destination Climate Champions, educates DMOs on incorporating sustainability into their daily practices.  The second program, Destination Giveback Initiative, works with DMO partners to identify and donate to local causes.
  • Wyndham Seeks to Drive Direct Business Bookings.  Wyndham announced plans last week to improve how companies book group meetings and events and individual business travel.  Among the announced changes, companies booking events and travel can now receive loyalty program points and rewards.  Additional changes include improved account tools making it easier for companies to establish corporate accounts.  Wyndham’s efforts come on the heels of announced changes at Hilton designed to improve the direct booking process for businesses.

As you can see from our short list of stories below, it was a relatively quiet week in the online travel world.  I hope you enjoy:

• • DerbySoft Moves Into Airline Industry.  Hotel distribution connectivity provider, DerbySoft, announced plans last week to acquire China-based Pkfare.  Pkfare provides connectivity services for hotels similar to DerbySoft, but also provides those services to approximately 600 airlines (an industry that DerbySoft has not yet penetrated).  Terms of the deal were not disclosed.  The companies plan to maintain their independent businesses, with certain back of house functions integrated. 
  • Expedia Exploring Sponsored Listings for VRBO.  The same sponsored listings (a/k/a advertisements) that Expedia and Hotels.com feature today on their respective websites may soon make their way to VRBO.  In a recent interview, Rob Torres (SVP of Media and Affiliate Solutions at Expedia) identified the listings as something he’d like to change at VRBO.  Airbnb does not currently provide an advertising platform on its site.   
  • Additional Thoughts on Recently Announced Expedia and Amadeus Partnership.  Last week we included the recent announcement by Expedia and Amadeus regarding their newly expanded technology relationship, an expansion that will allow Expedia to offer Amadeus’ New Distribution Capability (NDC) content.  By moving away from the decades old technology offered by the major GDS providers to NDC, Expedia will soon be able to offer its users many of same products and services offered through airlines’ own channels – seat selection, pre-flight services and onboard products and services.