Duff on Hospitality Law

This week’s Online Travel Update is below.  With summer now in full swing, it is no surprise that last week was another relatively quiet week in the online travel world.  Speculation continues around the Expedia / Hopper termination and the possible fallout for the entire online travel industry.  For those of you interested in learning more about the recent split, we’ve included a link to Skift’s recent podcast on the issue.  Enjoy.

• • Sabre Records Win in Competition Between Major CRS Platforms.  Hyatt announced last week that it was partnering with Sabre for its new central reservation system to be rolled out in 2024.  Hyatt’s selection of Sabre breaks the long string of victories by Sabre competitor, Amadeus, which has previously announced similar CRS platform deals with IHG, Marriott and MGM.    
  • Expedia Cuts Staff in Several Departments.  Word began to spread (unofficially) last week that Expedia had laid off staff across multiple departments (including IT, support, recruiting, marketing and B2B services) affecting Expedia’s offices in the United States and abroad.  In response to inquiries, Expedia stated that the layoffs were part of the company's ongoing reprioritization and simplification of its resources.  Expedia would provide no details on the number of employees impacted. 

This week's Online Travel Update is below.  As evidenced by the number of stories in this issue, it was a busy week in the online travel world, ending with what appeared to be a distributor dogpile on competitor Hopper.  Enjoy.

• • Expedia Terminates Hopper; Kayak Joins Scrum.  Thursday’s industry headlines were dominated by news of Expedia’s termination of its hotel and vacation rental supply agreement with industry upstart Hopper (and by extension, its many white label B2B partners, including Capital One). While Expedia attributed the termination to concerns over consumer “confusion and anxiety,” Hopper and industry pundits were quick to point to Expedia’s likely growing competition concerns.  Sensing blood in the water, Kayak’s CEO, Steve Hafner, gratuitously jumped into the fray supporting Expedia’s decision to terminate.  Suppliers that rely on Expedia as their exclusive B2B distribution platform (or that are considering such a relationship in the future) must ask what such a termination might mean for them as a potentially important channel is terminated.   
    
    
  • TUI Unveils Package Offerings.  Travelers in the UK have a new (old) hotel booking option.  In June, European tour operator, TUI, known historically for its travel packages, launched a standalone platform in the UK.  By the end of the year, TUI expects to have over 30,000 hotels available on the platform for standalone bookings (together with bookings of other individual travel components).  Suppliers, it is time to review those existing tour operator agreements.     
    
    
  • Priceline Partners with Amazon for Prime Day.  While Booking Holdings has partnered in the past with Amazon to offer Amazon’s prime members discounts or other special benefits, Priceline’s partnership with Amazon to provide Prime members special U.S. Prime Day discounts is a first. 
    
    
  • Finnair Concedes to OTA Discounts.  In response to an ongoing investigation by the Swedish Competition Authorities, Finnair has agreed to no longer restrict how OTAs advertise and sell discounted flights on their websites.   Whether this decision by Finnair is instructive as to how competition authorities might view similar efforts by hoteliers (whose relationships with OTAs are considerably different than airlines’) remains to be seen. 

This week’s “vacation edition” Update features only two stories, the subjects of which have been featured in prior Updates. We will be back with our regular Updates next week!

For those of you in the U.S. and Canada, happy Independence Day. This week’s Update features a number of important legal updates – both in the U.S. and in the EU.  The next 6-9 months should prove to be interesting as the EU moves forward with the implementation of its new digital legal framework – the Digital Services Act (DSA) and Digital Markets Act (DMA).  I hope you enjoy.

• • FTC Identifies Possible Competition Concerns with Generative AI.  This past week, the FTC published a blog post detailing its view of potential competition concerns with generative AI.  Key building blocks identified by the FTC for the successful use and implementation of generative AI (and all favoring large industry incumbents over new industry participants) include (1) data, (2) talent and (3) computational resources.  Identified areas of concerns include a number of “industry standards” seen with prior emerging technologies – control of critical inputs, bundling and tying of products and services and exclusive dealing.  Here we go again.
    
    
  • First Fraud, Now Chargebacks.  Having heard firsthand this past week while at HSMAI’s events in Toronto of hoteliers’ growing frustration with chargebacks, I wasn’t surprised by the results of Outpayce’s (Amadeus payments business) recent survey of travel executives, which, among other things, detailed the travel industry’s growing chargeback challenge.  According to the survey, over two thirds (71%) of the respondents have seen an increase in chargebacks with 33% experiencing a growing number of chargeback disputes over the past year.  According to the survey, respondents attributed the increase to a number of factors - (1) consumers view that the chargeback process is easier (thanks in part to mobile banking apps) than refunds and (2) consumers’ increased awareness of chargebacks generally. 
    
    
  • Booking.com Designated a “Very Large Online Platform” Under DSA.   As many wait to learn Booking.com’s fate under the DMA (i.e., whether Booking.com will be designated a “Gatekeeper”), it is important to remember that Booking.com has already been designated a “Very Large Online Platform” (VLOP) under the DSA.  Back in April of this year, the EU Commission announced its decision that Booking.com satisfied the 45 million monthly active user threshold to be designated a VLOP.  Why is this important?  First, Booking.com’s designation as a VLOP may be a telltale sign of its pending gatekeeper designation.  Second, recent events may provide some indication as to how Booking.com might challenge (and ultimately delay) its VLOP designation or possible future gatekeeper designation.  Late last month, German online retailer Zalando, also a recent VLOP designee, filed suit appealing its designation, arguing that its unique hybrid model (combining both retail and platform businesses) caused it to fall well below the 45 million user threshold.  What effect Zalando’s claims might have on its designation or its eventual compliance with the many VLOP content requirements is unclear, but we may soon see other designees – Booking.com – following Zalando’s example.

For those of you who attended HSMAI’s events this past week in Toronto, it was great seeing so many of you at Monday’s roundtables.  I hope each of you got as much out of our sessions together as I did.  Have a great week.