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.

This week’s Update features a wide variety of stories, including two on the growing influence of fintech products and their suppliers:

• • Google and TikTok Out as Travel Planning Tools?  A recent survey of U.S. travelers by travel publisher Matador Network (and owner of AI powered travel assistant, GeekGuide) revealed that more than a third of travelers intended to use AI to research or plan travel. 

• • Buy Now, Pay Later Becomes Save Now, Buy Later.  Online travel agent, CheapOAir, has launched new fintech tools that allow travelers to save for future travel purchases on the online platform (a/k/a layaway).  Users of the new tool can receive cash incentives of up to 6%.  Fintech company, Accrue Savings, powers the program, and amounts deposited will be insured through Blue Ridge Bank. 

• • Additional Details Emerge Re Regulators Concerns Over Booking Holdings’ Planned Purchase of ETraveli.  Since late 2021, we’ve been covering Booking Holdings’ planned purchase of European online platform ETraveli.  EU regulators expressed concern late last week about the effect of the planned purchase, specifically with regard to hotels as Booking’s growing market position among competing online platforms would lead to higher costs for hotels and ultimately consumers.    

Have a great week everyone.  We will be offline next week as I head out to Toronto for HSMAI’s week of events.  I hope to see many of you there. 

This week’s Update features a variety of stories, including an update on the major online booking platforms’ latest quarterly marketing efforts. Highlights include:

• • Big Three Spend a Combined $3.5 Billion on Marketing in the First Quarter.  Booking Holdings, Expedia and Airbnb spent a combined $3.5 billion on marketing during the first quarter of 2023, almost a billion more than the same period in 2022.  When measured against quarterly revenues, Expedia’s quarterly marketing spend was the largest (63% of quarterly revenue) with Airbnb spending the least (just 25% of quarterly revenue).  Rival Booking Holdings spent 39% of its quarterly revenue. 
    
    
  • Priceline is the Latest Online Platform to Announce Implementation of AI.  This past week, Priceline announced it was partnering with Google Cloud to implement generative AI into multiple areas of the platform’s business.  The planned integrations will be both consumer facing (e.g., a conversational AI powered chatbot to assist users in creating itineraries and selecting accommodations) and internal (e.g., a marketing platform that develops copy and images for use across the company’s channels).  Priceline is only the second travel platform to announce its use of Google’s AI products as the majority of announcements to date by online travel platforms have been for OpenAI, the makers of ChatGPT.
    
    
  • Capital One Continues to Expand its Travel Platform.  Capital One announced this past week that it was acquiring online concierge company, Velocity Black, which will expand the financial institution’s ability to offer experiences to its growing user base. 
  • Expedia’s AI Advantages Short Lived.  Readers of our Update might remember recent statements from Expedia Group’s Barry Diller claiming that Expedia had an advantage over its competitors in the adoption of AI, in part, because OpenAI’s CEO, Sam Altman, was a member of Expedia’s board.  Any advantage that Sam’s presence on the Expedia board might have provided was relatively short lived as Sam announced this past week that he was stepping down from the Expedia board. 

For the first time, our weekly Update delves into the world of artificial intelligence (AI).  We’ve tried for several months now to avoid joining the chorus of voices proselytizing about the likely effects of AI, but as the reality of AI starts to set in and its potential uses become more apparent, it is impossible to avoid.  Expect to see more stories in the future on AI (and its likely legal implications) as curated by my colleague and contributor Erin Snodgrass.  I hope you enjoy.

• • Priceline’s New Head of Accommodations Outlines Her Plans for the Future.  Priceline’s new Senior Vice President and Head of Accommodations, Traci Mercer, shared her thoughts about the future of the Booking.com little sibling in a recent interview with PhocusWire.  Highlights from the recent interview include:
    • 2023 marks Priceline’s 25th year anniversary
    • North America, particularly, the United States is Priceline’s current top priority for growth
    • From a supplier perspective, both Priceline and Agoda will continue to work together – at least in North America
    • Priceline Partner Solutions (Priceline’s B2B offering) will remain a growth opportunity as Priceline seeks to leverage its recent acquisition of Getaroom

• • Expedia Calls Out Agoda’s Abusive Discounting Practices.  While we’ve grown accustomed to suppliers’ complaints over the years about the business practices of online distributors, it has been unusual to see online distributors questioning the practices of their competitors.  In a recent interview, Expedia’s CEO, Peter Kern, openly questioned Agoda’s discounting practices and characterized Agoda as “one of the worst when it comes to this sort of rate abuse.”  Historically, Agoda has acknowledged and even embraced these practices (in the name of the consumer) making clear that it will do everything it can to source any available discounted rates – including via wholesalers, whose practices, Agoda maintains, could always be better managed by their supplier partners.
    
    
  • Hotel Distribution Trends to Watch.  We’ve included in this week’s Update a recent report from IHG’s Andrea Daniels summarizing the recent thoughts and predictions of HSMAI’s Global Distribution Advisory Board regarding the future of hotel distribution. 
    
    
  • Add Hilton to the List of Hoteliers Targeted in Texas for Their Resort Fee Practices.  Just weeks ago, we detailed Texas Attorney General, Ken Paxton’s newest resort fee disclosure claims against Hyatt (following quickly on the heels of his announced settlement with Marriott).  Now, we can add Hilton to the list of hoteliers targeted by the Attorney General.  Many questioned whether the Attorney General’s own political and legal troubles (including a possible impeachment) might slow his solitary campaign, but, at least for now, those troubles do not appear to have any real effect on his approach to resort fees. 

As evidenced by our list of stories, it was a relatively quiet week in online travel.  The Texas Attorney General’s Office and its pursuit of hotel companies over their resort fee practices garnered most of the industry’s headlines (exactly as the Texas AG wanted). Some highlights from this week:

• • Following Its Settlement with Marriott, Texas AG Targets Hyatt.  With a settlement in hand with Marriott, the Texas Attorney General is now targeting other national hotel brands and operators with claims that their rate and resort fee practices violate Texas consumer protection laws.  In announcing the settlement, Texas Attorney General Ken Paxton stated, “Marriott is now taking proactive steps to promote price transparency.  In contrast, other major hotel  chains have defended their deceptive practices, and they will be facing the full force of the law for their actions.”  Apparently, Hyatt is next on the Texas AG’s list as the AG’s office filed suit on Monday against Hyatt. 
    
    
  • Fact or Fiction:  Instant Booking for Meetings and Events.  For some time now, we’ve been working with clients to move their sales and contracting practices for small meetings and events to online platforms (both proprietary and third party) with the promise that small meetings and events can be booked instantly.  But do these tools really work?  Is that what meeting planners and groups really want?  Or do the many nuances of a successful meeting or event (as compared to a rooms only leisure booking) make them too difficult to book entirely online?  This past week, Skift, offered its perspective on these instant booking platforms. 

For those of you attending the upcoming week of events in Toronto (HSMAI’s Commercial Strategy Week), I would enjoy connecting.  I’ll be presenting on Monday at the Executive Roundtables and facilitating that afternoon the discussion at the Chief Distribution Officer roundtable.  I hope to see you there!

Welcome to our weekly Online Travel Update. Expedia’s many announcements at its Explore 23: Connect conference this past week garnered most of the industry headlines, while Uber moved closer to becoming a full online travel booking platform. Recent news highlights include:

• • CWT Partners with Booking.com’s Booking for Business.  Want to participate in Booking.com’s corporate booking platform, Booking.com for Business?  You may have no choice now.  CWT and Booking.com announced last week a new partnership under which CWT will provide the corporate booking platform discounted (and perhaps, loyalty program) rates and inventory for its suppliers’ hotels, flights and rental cars.
    
    
  • Uber to Offer Flights to UK Users.  Users of Uber’s transportation booking application in the UK will soon be able to search and book flights.  Powered by Hopper, the new functionality will include Hopper’s signature fintech products, including Prize Freeze and Cancel for Any Reason.  Uber plans to roll out the new offering across the UK this summer with no announced plans to introduce the offering outside the UK.
    
    
  • Expedia Announces Several New B2B Initiatives.  At Expedia’s Expedia 23:Connect conference held this past week in Seattle,  Expedia announced several new B2B initiatives, including a new partnership with Mastercard that allows issuers of the cards to allow users to redeem credit card loyalty program points for travel products and services offered through Expedia.  Other announcements at the event include the launch of Expedia’s travel operating system (Travel OS), whose first commercial “micro-service” will help users protect against fraud, the launch of Expedia’s guest experience score, the launch of new rate management capabilities for those suppliers using Expedia’s optimized distribution (OD) platform and the launch of new capabilities for travel agencies using Expedia’s Travel Agent Affiliate Program (TAAP).  For those of you wanting a more intimate view of last week’s Connect event, we’ve included a story about the event from Seattle’s own technology newsletter, Geekwire.

This week’s Update features a variety of stories, including updates on Ryanair’s attempts to stop platforms’ scraping of fares and other content from its website.  We will continue to keep monitor Ryanair’s claims against Booking.com in the weeks ahead.  Enjoy.

• • European Commission Resumes Review of Booking Holdings’ Proposed Purchase of ETraveli.  It’s been some time since our last story on Booking’s planned purchase of online flight booking platform, ETraveli.  The Commission suspended its review of the purchase approximately four months ago, but announced this past week that it was resuming its work.  The Commission has until August 30 to complete the review. 
    
    
  • Fintech, Tips, Support Service Fees and More:  Hopper Has It All.  Much has been written in the industry (including our own Update) about Hopper.  Hopper was one of the first platforms to fully leverage “fintech” tools as part of its B2B and B2C offerings.  With the renewed attention on resort fees and other mandatory charges, Skift’s recent article about “tips” on Hopper’s booking platform caught our attention.  Although Hopper’s “tip” is not mandatory, users of the platform (assuming they even see the charge) must affirmatively opt-out of payment the flat-fee or percentage charge.  Hopper takes a similar approach with support service fees, which also require an unsuspecting user to opt-out of paying the additional charge.  Does the ability to opt-out of these charges allow Hopper to avoid current efforts to reign in so-called “junk fees,” possibly, depending on the conspicuousness of the fees and their disclosures.  If the tips are simply a mechanism for offsetting operating costs (as opposed to actual “tips” paid to individuals who assist in making the booking), however, Hopper could garner the attention of regulators or an enterprising class action firm. 
    
    
  • Expedia Launches Platform to Make Entertainment Tourism Bookable.  Expedia Media Solutions announced last week the launch of a new media platform that allows users to shop and book travel while watching travel content.  If successful, the platform will allow Expedia to capitalize on the growing influence of television and movies (think “White Lotus”) on travelers’ decisions.  Brand USA has partnered with Expedia in the launch of this latest new offering by working together to create a dedicated channel (GoUSA) that features inspirational travel content and interactive maps, while at the same time allowing viewers the opportunity to book featured destination (hotels, air and experiences) in real time.  The channel is now live in Canada and will be rolled out to other international markets over the course of the year.