Duff on Hospitality Law

South Korean Competition Authority Takes a Hard Look at Parity
(“Comment: Use by online-travel agencies of MFN clauses under study by South Korean antitrust watchdog,” MLex Insight on Dec 5, 2019)
South Korea’s Fair Trade Commission (KFTC) is rumored to be considering possible antitrust enforcement action against the distributors Booking.com and Agoda over their use of contract rate parity provisions. An investigation of the distributors’ practices is currently under way, and the results of the investigation are expected to be released later this month. Also, under consideration are the market implications of broad versus narrow parity requirements. Stay tuned for further updates.

It should come as no surprise that stories detailing the unexpected resignations of Expedia’s top two senior executives are featured prominently in this week’s Update. Rather than just recirculating the usual industry reports, we thought we might offer a more localized (and detailed) view of the resignations. Oh yeah, we also decided to throw in a story about another Pacific Northwest company’s expansion of its closely watched travel experiment. Enjoy.

Okerstrom and Pickerill Out
(“Expedia’s two top execs pushed out as chairman Diller asserts control,” Seattle Times on Dec 5, 2019)
By all accounts we’ve seen, last week’s resignations of Expedia Group CEO Mark Okerstrom and CFO Alan Pickerill came as a complete surprise. What led to the sudden departures? Expedia Group’s dismal third quarter financial results? Differing perspectives on Expedia Group’s go-forward strategies? I’m not sure we will ever know all of the reasons for the resignations. A copy of Expedia Group Chairman Barry Diller’s text to Expedia Group employees immediately following the resignations is included in our Geekwire report. For now, Expedia Group will be led by Diller and Expedia Group Board Vice Chairman, Peter Kern. What this all means for Expedia Group’s hotel supplier partners is unclear, though if asked to speculate (which is all anyone can do at this point), I’d offer that it might be rough going in the near term. While Cyril Ranque appears to still be President of Expedia Group’s lodging partner services, it isn’t clear whether Ranque or even his role within the Expedia Group organizational chart will remain. Even if Ranque retains his position long term, we have no idea what influence Diller’s presence might have on Ranque and his approach to suppliers. We know firsthand that Okerstrom often got personally involved in the negotiation of key lodging partner agreements, and whether Diller is prepared to play a similar role (or even if not playing that role, how Diller might view Expedia Group’s supplier partners and the more moderate “cooperative” approach to key supplier partner relationships exhibited under Okerstrom’s leadership) is unknown. Buckle up everyone.

Need a Recipe? Ask Airbnb
(“Introducing ’Cooking‘ on Airbnb Experiences,” Hospitality Net - Latest Industry News on Nov 26, 2019)
Last Monday, Airbnb introduced “Cooking” on Airbnb Experiences. The new category of experiences allows travelers to book non-traditional experiential cooking classes hosted by families, farmers and other local hosts. The experiences category also provides access to more than 3,000 global family recipes vetted by Slow Food, a grassroots organization dedicated to preserving local foods and customs.

Startup Seeks to Turn Traditional Group Booking Upside Down
(“Booking Startup Stayker Makes Room Blocks Less Risky for Planners,” Skift Travel News on Nov 20, 2019)
Launched last Thursday, Stayker seeks to disrupt traditional group sales and contracting. Rather than rely on traditional room blocks and all that they entail (e.g., room revenue commitments, cut-off dates and attrition), meetings planners using Stayker would bypass the entire rooms negotiation process (and related uncertainties) and instead offer their attendees a link to the new online booking platform. Attendees using the platform would then be able to view all available room inventory in the area (from multiple properties) and book wherever (and whenever) they want at the current rates (no negotiated group rates.) Should such a platform catch on, the group segment (and its associated revenue) could change dramatically. Group bookings would cover food and beverage and meeting space only. Hotels seeking to house group attendees would compete on an area-wide basis and market and promote their inventories (once again) through a third-party online intermediary. It will be interesting to see whether meeting planners embrace this new model. Stay tuned.

Vrbo Repositions Itself
(“Expedia’s Vrbo to Reposition Itself Beyond Vacation Rentals as a Family Travel Business,” Skift Travel News on Nov 14, 2019)
Fresh from its disappointing third-quarter financial results, Expedia Group’s recently announced “repositioning” of Vrbo may be just what the doctor ordered. Earlier this month, Vrbo’s new general manager, Jeff Hurst, announced that Vrbo (Expedia’s short-term rental platform) plans to reposition itself as a family travel site offering vacation products and services (e.g., resort accommodations, in-stay services, etc.) beyond short-term rentals. Expedia provided few details about the new platform and no timeline for the planned repositioning.

Algorithms Under EU Scrutiny
(“Algorithms might raise collusion concerns, Franco-German study says,” MLex Insight on Nov 8, 2019)
As many of you probably already know, algorithms are the heart and soul of most online travel booking platforms (if you doubt me, just try asking for details about property rankings.) The antitrust authorities from Germany and France recently released a joint study examining the effects of algorithms on competition. In particular, the study focused on the relationship of pricing algorithms and horizontal collusion, and how the market dominance of certain platforms (including online travel agencies) may affect the algorithms used. If anyone would like a copy of the study, please let us know.

Indian Online Travel Agent Joins Ranks of Those Being Investigated for Potential Consumer Abuses
(“MakeMyTrip faces battery of allegations of unfair business practices following merger,” MLex Market Insight on Nov 1, 2019)
Indian (and Nasdaq listed) online travel agency (OTA) MakeMyTrip is the latest online travel platform to face scrutiny over allegedly questionable business practices. The Competition Commission of India (CCI) has ordered an investigation of the OTA following receipt of a complaint from the Federation of Hotel & Restaurant Associations of India (FHRAI). The FHRAI complaint contains a number of allegations that should be familiar to our readers – market dominant position (63 percent of domestic online market), excessive commissions (22-40 percent) and broad rate and availability parity requirements. Findings from the investigation are expected in four to five months.

Japanese distributor Rakuten leads off this week’s Update with a story detailing the circumstances leading to the distributor’s recent commitment to abandon all contractual parity requirements. Enjoy.

It’s Official: Rakuten Eliminates All Parity Requirements
(“Travel platform Rakuten becomes first firm in Japan to commit to remedies by eliminating parity clauses,” MLex Insight on Oct 25, 2019)

Japan’s Fair Trade Commission (JFTC) announced this past Friday that Rakuten (Japan’s largest domestic online travel platform) has officially committed to remove all rate and availability parity obligations in its contracts with the nearly 33,000 hotels listed on its site. The commitment will run for three years, at which point Rakuten’s industry position will be re-examined. It’s unclear what effect Rakuten’s commitment might have on Booking.com or Expedia, both of which were part of the JFTC’s investigation that began in April with raids on each distributor’s Japanese offices.

This week’s OTA Update leads off with stories about two of the largest OTAs seeking to diversify their offerings through the addition of flights. As each of these travel platforms continues to evolve and seek to add more products and services, it won’t be long until there will be little to differentiate them. Enjoy.

Booking.com Takes Off (Literally)  
(“Booking.com Launches Flights Through Partnership Across Europe,” Skift Travel News on Oct 15, 2019)
As further evidence of Glenn Fogel’s planned evolution of Booking.com into a full-service travel platform, Booking.com rolled out this past week standalone flight offerings to travelers in the United Kingdom, Germany, Italy, Spain, Ireland, Austria, Belgium and the Netherlands. Travelers previously seeking airline tickets in these countries (and still today in other locations) were re-directed to sister metasearch site, Kayak, where travelers were then re-directed to other OTAs or the airlines themselves for booking. Now, travelers in the eight listed countries can book flights directly on the Booking.com website/application through Swedish travel partner eTraveli (though some travelers are re-directed to eTraveli’s site Gotogate to complete the booking.)

This week’s OTA & Travel Distribution Update features a number of stories on recent changes at Google with regard to the way in which it displays vacation rentals and the market’s response to those changes. Enjoy.

“Alexa, find me tickets to…” Destinations Go Vocal
("How destinations might soon have a voice via Amazon and Google," Phocus Wire on Oct 11, 2019)
Meet Simpleview. The UK-based digital agency that specializes in the tourism industry is building (beta version is expected by year end) one of the first destination-focused applications for Amazon Alexa and Google Home. When finished, the application will allow users to search third-party destination information (e.g., activities, dates and times) via their voice-activated devices.