Duff on Hospitality Law

Our weekly Online Travel Update for the week ending February 10, 2023, is below.  This past week saw the beginning of quarterly earnings releases by the major platforms, with Expedia and its meta search platform, Trivago, being the first.  Expect more details about these 4^th quarter releases in future updates.  Enjoy.

• • Expedia’s Loyalty Program Posts Strong Gains.  While Expedia posted reasonably strong fourth quarter and full year (2022) financial results this past week (see attached earnings release transcript for more detail), it was the growth in Expedia’s loyalty program that garnered much of the attention.  During the fourth quarter, the number of Expedia customers who became loyalty program members grew by 60% over the same period in 2019.  With those increases, Expedia entered 2023 with more active loyalty program users than ever (more than 10% higher than the previous peak).  According to Expedia CEO, Peter Kern,  the number of Expedia loyalty program members and number of active Expedia app users (which also grew over the past quarter) are the two primary factors that Expedia uses when evaluating progress against its goal of maintaining long term its highest-value customers. 
  • Trivago Targets Direct Bookings.  In recent correspondence accompanying its fourth quarter and full year (2022) earnings release, Trivago highlighted its ongoing efforts to grow hotel direct bookings.  According to Trivago, direct bookable rates are now available on the meta search site for properties that receive 50% of click outs (and increase from 38% prior to its direct booking push).  Trivago hopes to get that number to over 80% by the end of the year.  Direct bookings are now possible in 8 of Trivago’s markets. 

Have a great week everyone.   

Our weekly Online Travel Update for the week ending February 3, 2023, is below.  This week’s Update features of number of stories detailing the Biden Administration’s growing efforts to address “unfair” fees, including hotel resort fees.  Enjoy.

• • Biden Calls for Legislation Limiting Unfair Fees.  Add ticket agency fees (thank you Taylor Swift) to the growing list of “unfair” fees being targeted by the Biden Administration.  In comments at last week’s meeting of the White House Competition Council, the President called on Congress to pass legislation (the Junk Fee Prevention Act) limiting fees in several industries, including an outright ban on “surprise resort and destination fees.”  The likelihood of any substantive legislation coming out of Congress – particularly given the strong business interests that will likely line up to oppose any such legislation and the general divisive (dysfunctional) nature of Congress – is very low.  While federal legislation may be a remote possibility, the same headwinds may not hinder similar efforts at the federal regulatory level (FTC) or individual state level.  This week’s news of possible federal legislation on the issue comes as several clients are hearing rumblings or actually receiving written notice of increased efforts to reign in resort fees at the state level. 
  • Google’s Overall Advertising Revenues May Be Down, But Not for Travel.  While overall Google’s parent, Alphabet, saw a fourth decline in overall advertising revenue, travel advertising revenue actually increased over the latest quarter.  
  • Rising Interest Rates Increase Value of Merchant Bookings.  With Expedia reported to have earned $20 million in interest income in the third quarter of last year, in part, on funds held as part of prepaid guest bookings, it is no wonder other platforms are getting into the payments business (yes, we recognize that there are many other benefits as well).  Airbnb earned $58 million in interest income. 
  • Event Platform, CVENT, Reportedly for Sale.  If a sale does occur, it won’t be the first time the platform is taken private.  This time, private equity heavy weight, Blackstone, is the rumored suitor.  Will a sale mean changes to the platform’s management (and impossible contracting practices)?  Likely not, as CVENT’s management stayed largely intact through CVENT’s many prior transitions. 

Have a great week everyone. 

Our weekly Online Travel Update for the week ending Sunday, January 27, is below.  This week’s Update provides updates on both DOT’s and FTC’s recent rulemaking efforts around “hidden” industry fees.  Enjoy.

• • Google Updates Upcoming.  In an effort to comply with mounting pressure from the EU competition authorities, Google has agreed to make changes to the information displayed through several of its platforms and stores.  Specifically, Google Flights and Google Hotels will soon distinguish between services provided by Google versus third parties, make clear that Google Hotels does not verify or confirm guest reviews and comply with the transparency guidelines applicable to other online booking platforms. 
  • Objections Raised Over Proposed DOT Ancillary Fee Rules.  While industry trade groups have largely voiced support for increased transparency of ancillary fees, both ASTA and the Travel Technology Association have raised objections with the Department of Transportations’ proposed regulation on the same subject.  Specifically, both groups have raised objection with the draft regulation’s exclusion of global distribution systems.  The Travel Technology Association has also voiced concerns over the requirement that ancillary fee information must be displayed on the first page of search results, which, according to the Association, would make shopping extremely confusing for consumers, particularly for those using its metasearch site members.    
  • Five Thousand Comments and Counting:  FTC’s Notice of Proposed Rulemaking Garners Attention.  As comments to the Federal Trade Commission’s notice of proposed rulemaking on ancillary fees (including hotel and resort fees) continue to roll in, the FTC has elected to extend the comment period through February 8.  Anyone interested in reviewing the comments can find a searchable catalogue here - https://www.regulations.gov/docket/FTC-2022-0069/comments.

Have a great week everyone.  So great seeing so many people this past week in Seattle at HEDNA. 

Our weekly Online Travel Update for the week ending January 13, 2023, is below.  This week’s Update features an interesting update on OTAs’ current loyalty programs and future ambitions and the recent (somewhat concerning) comments of Booking.com’s CFO regarding Booking.com’s ambitious plans for its payment platform.  Enjoy

• • OTAs’ Loyalty Ambitions Continue to Evolve.  PhocusWire featured this past week an interesting story on the evolving loyalty ambitions of the major distribution platforms – Expedia, Booking.com, Hopper and Airbnb (interesting to note that Agoda/Priceline, Trip.com or other large platforms did not make the cut).  Highlights from the article include (1) Expedia’s upcoming rollout of its new combined loyalty program, One Key, which will reward members with both upfront immediate discounts as well as loyalty program accruals that can be used for future bookings (including VRBO), (2) the anticipated cooperation among Booking.com’s existing loyalty program (Genius), its Rewards & Wallet program and its new payments platform to provide members both upfront discounts (up to 20% now and maybe larger in the future) and loyalty program accruals and (3) Hooper’s and Airbnb’s alternative approach to building brand loyalty via gamification (Hopper) and alternative service programs (Airbnb’s Aircover) without a traditional membership program. 
  • The Future of Booking.com’s Payments Platform?  The recent comments of Booking Holdings’ CFO, David Goulden, which were featured last week in Dennis Schaal’s weekly Online Travel Briefing for Skift, sent minor tremors through the hotel industry.  In his comments, Goulden blamed the slowing growth of Booking.com (in the years leading up to the pandemic) on its over reliance on the agency model (i.e., hotel collect model). Now, with Booking.com’s rollout of its payments platform (and its new merchant role), things may be changing at Booking.com.  According to Gould, the payments platform will allow Booking.com to better merchandise its products and services through various newly available “levers.”  More specifically, with regard to hotel rates, Gould noted that “we [Booking.com] relied entirely upon what we got from our property partners to give us great rate because its still primarily what we do, but we couldn’t participate in those more targeting pricing promotional activities, and now we can.” What should suppliers anticipate for 2023?  Rate discounts?  Instant credits or rebates?  Armed with recent (favorable) changes and clarifications in EU competition law, Booking.com is well poised to take advantage of any or all of these opportunities.       

Have a great week everyone.  

Our first weekly Online Travel Update for 2023 is below.  With many still celebrating the recent holidays, last week remained rather quiet in the online travel world.  Enjoy.

• • Booking.com and Expedia Mobile Apps Fare Well in 2022.  Mobile app downloads are one of the many metrics that industry analysts like to watch when evaluating online travel companies.  According to a recent report from Apptopia, both Booking.com and Expedia fared well in the United States in 2022.  Booking.com’s mobile app moved up one spot to fifth in 2022 travel app downloads, and Expedia’s app jumped two spots to seventh.   Last year’s industry darling, Hopper, fell five spots to ninth (not entirely surprising given the now ubiquitous nature of Hopper’s price prediction and fintech tools).  Expedia’s jump reflects a near doubling of annual downloads (16.6 million) over 2021.   American Airlines was the only travel supplier to make the United States top ten list, with 12.3 million downloads.  Internationally, Booking.com also faired well, coming in third in 2022 international travel app downloads.  Among the OTA apps, Booking.com was the most downloaded app in both the United States and internationally. 
  • Further Details on India’s Approach to Rate Parity.  A few months ago, we shared details of the Competition Counsel of India’s decision imposing heavy penalties against India-based online travel agent, Make My Trip (and its related companies) and ordering the removal of contractual rate and availability parity provisions in its supplier contracts.  This week we feature a story that goes into greater detail regarding the CCI’s decision and the factors it considered before rendering its decision.  A couple of key takeaways . . .  First, the CCI evaluated MMT’s behavior in the context of online intermediation services for hotel bookings in India (a narrow definition of the relevant market), not the much broader market definition proposed by MMT (a similar market definition issue is now before a Dutch court).  Second, the anti-competitive effects of MMT’s broad parity obligations, exclusive listing obligations and deep rate discounts (a trifecta of factors working against hoteliers and other competing OTAs) more than outweighed the so-called “free rider” concerns voiced by MMT.  Third, the fact MMT’s requirements may have been “industry standard” does not carry much weight if the distributor at issue has sufficient market power to determine the relevant market’s terms.  

Have a great week everyone.  For those of you traveling to Seattle later this month for HEDNA’s annual Global Distribution Conference, I hope to see you there.  I’ll be speaking on Wednesday morning on the new distribution regulatory environment. 

Happy New Year! We are once again providing a roundup of some of the major developments and trends in the online travel industry that caught our attention this past year. Wishing everyone a successful 2023. 

- Greg Duff
 

Our weekly Online Travel Update for the week ending December 23, 2022, is below.  As our short list of stories highlights, last week was a relatively quiet week in the online distribution world.  Enjoy.

• • DOT Extends Comment Period for Proposed Rule on Airline Ancillary Fees.  For those of you who have followed our updates on federal rulemaking around ancillary fees in the travel industry (both airline and hotel), you’ll recall that before the FTC announced its plans to pursue rulemaking for hotel and resort fees, the Department of Transportation (DOT) announced its own plans to regulate ancillary fees in the airline industry, including publishing a proposed new rule on the issue in October.  At the request of several industry trade groups and associations, the DOT announced last week that it was extending the comment period for those interested in the proposed new DOT rule.  With the extension, the comment period now runs until January 23. 
  • Phocus Wire’s Movers, Shakers and Newsmakers in Travel for 2022.  As the year draws to a close, it is always interesting to read major publications’ reviews of the prior year.  The online travel industry is no exception as Phocus Wire last week shared its list 2022 movers, shakers and newsmakers.  From my perspective, I was surprised by both a few of the items included in Phocus Wire’s list as well as a few items omitted from Phocus Wire’s list.  What do you think?  Did Phocus Wire miss anyone or anything in particular?  My own year-end Online Travel Update will be out next week summarizing the stories I felt were most important for this past year.  I look forward to your thoughts and comments. 

Our weekly Online Travel Update for the week ending December 16, 2022, is below.  This week’s Update includes updates and additional details on several stories we’ve featured previously, including Airbnb’s new all-in pricing and ongoing parity investigations of OTAs’ practices in Australia.  Enjoy. 

• • Airbnb’s Adoption of All-In Pricing Is Official.  Beginning this month, Airbnb users in the United States (and other countries where local laws do not already mandate the display of all-inclusive pricing) will now see prices displayed on the platform inclusive of mandatory fees and charges (e.g., cleaning fees).  The all-inclusive prices will not include taxes.  Beginning next year, all-in prices will be the default rates shown on the platform unless a user elects otherwise.  All-in prices will be featured on listings, maps and when filtering search results.  What this change might mean to hosts continued use of cleaning fees (which have been the subject of many traveler complaints) and other mandatory charges, only time will tell.   How might this change affect the pricing practices other short-term rental platforms, that too remains to be seen. 
  • History of Australia’s Treatment of OTAs.  This past week Australian news outlet, ABC, provided a helpful overview of the Australian Competition and Consumer Commission’s (ACCC) history with OTAs and the new pending investigation re-examining OTAs’ rate parity requirements.  If you are not familiar with how Australia has historically viewed these requirements or the new pending investigation, which many believe will result in an outright prohibition of all rate parity requirements, I encourage you to read the story. 
  • EY to Expand Use of Blockchain Booking Portal.  Having successfully completed an initial 6-month test of its new blockchain-powered leisure travel booking portal, EY has plans to expand the portal globally and to offer hotels alongside its current air offerings.  Through the portal, EY has made available to its U.S. based employees direct connections with at least 2 U.S. airlines interested in providing EY employees personalized, discount travel offers.  In the weeks ahead, EY plans to expand the portal globally and to add extended stay hotel options for employees needing accommodations for longer periods for work projects.  EY has already identified two hotel partners (not disclosed) that in addition to the extended stay work related offerings, plan to offer leisure content as well.  While EY has no immediate plans to pursue similar direct connectivity options for its traditional corporate travel, the lessons learned by EY are sure to make an impact. 

For those of you celebrating holidays this week or next, Happy Holidays. 

Our weekly Online Travel Update for the week ending Friday, December 9, 2022, is below.  Payments again feature prominently in this week’s Update as American Express (not to be outdone by Mastercard’s recent announcement) announces its recent investment in a growing hotel payments platform.  Enjoy. 

• • American Express Announces Investment in Selfbook.  This past week, American Express, acting through its venture capital vehicle, Amex Ventures, announced that it was making a strategic investment in hotel payments platform, Selfbook.  Selfbook’s technology allows hotels to offer a one-step online checkout and payment process, which can be used to purchase a variety of products and services (e.g., hotel room, spa treatment and restaurant reservation) with a single payment.  As part of its investment, American Express and Selfbook also plan to work together.  Selfbook happens to be one of PhocusWire’s hot travel startups for 2023. 

• • Demand for Travel Insurance Products Grows.  So why a story on travel insurance?  As many of you know, many of today’s shiny new fintech products (which we frequently cover as part of our Update) are little more than re-titled traditional travel insurance products (new flexible “cancel whenever you want” cancellation policies = trip cancellation insurance).  A recent study by Allianz Partners confirms that consistent with the extraordinary success seen by many of the newer providers of these fintech products, travelers’ interest in travel insurance is higher (much higher in the United States) now than prior to the pandemic.
  • Booking Holdings to Offer Full NDC Content.  Priceline announced this past week that it had reached agreement with British Airways and Iberia to feature and sell the carriers’ full NDC-enabled product offerings – flexible booking options, seat selection and bagging handling.  The newly announced deal extends across the portfolio of Booking Holdings’ companies – Priceline, Agoda and Booking.com. 

If you plan to be in Seattle in January for HEDNA’s upcoming conference, please let me know.  I’d love to see you and show you our Emerald City. 

Our weekly Online Travel Update for the week ending December 2, 2022, is below.  This week’s Update features an important update on distributors’ use of so-called narrow parity provisions in Australia and takes a closer look at two of Phocus Wire’s 2023 Hot Travel Startups.  Enjoy.

• • Australian Treasury Re-Examines Narrow Parity Provisions.  In a statement released last week, the Australian Treasury announced that it was commencing a review of distributors’ continued use of narrow (or direct channel) parity provisions.  The investigation makes good on the Australian Labor Party’s campaign promise to abolish price parity clauses if elected to office.  Readers of our Update will remember that Australia’s Competition & Consumer Commission (ACCC) investigated distributors’ use of parity provisions back in 2016, which ultimately led to Expedia’s (but not others) voluntary abandonment of the entire practice.  As part of its current review, the Treasury has circulated a questionnaire among hoteliers asking hoteliers to comment on the consequences of failing to honor the narrow parity provisions.  Hoteliers have until January 6 to respond. 

• • Another Weekly Update, Another Story on Payments.  Anyone noticing a trend here?  This past week Mastercard announced it was partnering with hospitality solutions provider, Sabre, and Sabre-owned Conferma Pay, to (in their words) build new capabilities for virtual cards.  As part of the newly announced deal, Mastercard is making a minority investment in Conferma.  Sabre’s purchase of Conferma and this newly announced partnership with Mastercard, is part of Sabre’s longer term of goal of building an independent payment ecosystem.  This latest announcement by Mastercard comes on the heels of Amadeus’ recent launch of its own payment business, Outpayce (which we covered in a prior Update), which will also include the launch of a virtual credit card.

• • Hot 25 Travel Startups for 2023 – Fairlyne.  Familiar with the term “re-commerce”?  Although the term has been primarily used in the retail industry, Paris-based Fairlyne hopes to change that.  Fairlyne’s technology allows railways, airlines and hoteliers to re-sell previously booked (but unused) non-refundable tickets and bookings.  As our readers might recall, there are a number of platforms that purport to allow travelers to re-sell their booked reservations (many acting in violation of applicable booking terms and conditions), but this is the first platform we’ve seen that works directly with the suppliers to allow their travelers and guests to re-sell their reservations.