Duff on Hospitality Law

This week’s Update features a variety of stories.

Distribution 101: Merchant Model vs.
Agency Model
("Allegation raises issue of how Expedia charges appear on statements," The Washington Post - Business News,
August 31, 2018)
Irrespective of your political persuasions, the Washington Post’s recent story regarding the unexpected role played by Expedia in exposing U.S. Representative Duncan Hunter’s and his wife, Margaret’s, alleged misuse of campaign funds will make the distribution junky in all of us smile. As the story explains, whether Expedia is acting as a merchant or agent for each of the airline tickets or hotel stays booked through the platform determines whether Expedia or the ultimate supplier or destination is disclosed on payment card statements. For anyone still confused by these two models and their significance, the story provides a surprisingly good high-level overview of distribution and the two primary business models used by the majority of online booking engines.

As the days of summer come to an end, activity in the distribution world has begun to pick back up again. I hope you enjoy.

Recent Important OTA Developments Largely Ignored? 
("Online travel agency moves harming profitability: What hotels need to know," Phocuswire, August 24, 2018)
This is not the first time we have warned our readers about these two newly promoted OTA programs – Expedia’s Add-On Advantage and Booking.com’s Booking.Basic. If you missed our previous stories on these two programs, please take the time to read Max Starkov’s piece from PhocusWire below. Although the names are new, the practices are not. The good news, as Max points out, is that there are measures that can be taken contractually to counter each of these programs (some of the same measures we attempt to put in place with each contract we review), but it all begins with awareness.

August has been a slow month in the distribution world as this week’s Update reflects.

Seattle Is Home to Yet Another Travel Industry Startup
("KuaiBangXing Links Chinese Travelers With Activities: Travel Startup Funding This Week," August 17, 2018)
There must be something in our Seattle water...Seattle-based activities booking platform, KuaiBankXing, announced last week that it had completed its $1 million angel round of funding. The 3-year old startup assembles itineraries (using either existing programs or directly assembling its own combination of tours and activities) and marries those itineraries with Mandarin speaking escorts.  KauiBankXing not only then promotes and sells these itineraries to inbound Chinese travelers (via OTAs like Ctrip and Fliggy), but also works with independent tour and activity providers to better promote and facilitate transactions with inbound Chinese travelers.

Travel Agency Hit With TCPA Class Action Over Cuba Texts
Law 360 - Cybersecurity & Privacy on Aug 10, 2018 (subscription required)
An online travel agency that arranges trips to Cuba got slapped with a proposed class action in Florida federal court on Thursday for allegedly violating the Telephone Consumer Protection Act, with the lead plaintiff claiming he received an illegal telemarketing text message via an automatic telephone dialing system.

Corporate Travel Sector Eyes a New Distribution Model Down Under
Skift Travel News on Aug 2, 2018
Qantas, Serko, and Corporate Travel Management are leading the charge towards new distribution capability adoption in Australia, promising better access to rich content. They will have to overcome plenty of confusion in the market, however, before the new distribution channels are fully accepted. Global airlines have moved slowly to adopt new technology that allows them to more effectively merchandise their products and connect directly with the companies that sell their flights.

This week’s Update features a variety of stories, including a story on an unique approach to loyalty. Enjoy.

Sweden Challenges “Narrow” Parity
("Swedish competition court orders Booking.com to change contractual restrictions," MLex, July 20, 2018) 
You can add Sweden to the handful of European countries (e.g., Italy, France and Germany) not convinced that Booking.com’s proposed rate parity panacea (a/k/a “narrow parity”) solves all competition ills. We hope to have more information about this recent Swedish court decision in the weeks ahead.

This week’s Update is heavily focused on the EU and its recent enforcement activities.

ETTSA Challenges European Commission’s Failure to Act
("ETTSA Files Complaint Against EU Commission Over Airline Surcharges," MLex, July 19, 2018) (subscription required)
While we don’t regularly feature stories detailing other travel industry members’ distribution challenges, we felt the European Commission’s recent decision to leave intact Lufthansa’s indirect booking surcharges warranted highlighting.  Since the Lufthansa policy was adopted in September of 2015, the European Technology & Travel Services Association (ETTSA) (which is comprised of a variety of indirect bookings platforms – GDSs, OTAs, etc.) has taken steps to challenge the policy, including filling an official challenge to the policy with the European Commission soon after the policy was announced. In May of this year, the European Commission announced that it intended to take no action in response to the Lufthansa surcharges or ETTSA’s complaint challenging the surcharge. Angered by the Commission’s failure to act, ETTSA filed a complaint this past week against the European Commission challenging on both procedural and substantive bases the Commission’s failure to act. While this series of events may not have direct application to hotel bookings, it may provide a glimpse into the current thinking of the European Commission toward suppliers’ attempts to better manage their indirect channel partners. More to come, I’m sure . . .

As our Update reveals, Booking Holdings monopolized the distribution headlines this past week.

Booking.com Goes Back to Basics
("Booking.com gets down to Basics, gets rates from other agencies," PhocusWire, July 10, 2018)
Hoteliers’ ongoing efforts to rein in the sometimes abusive distribution practices of certain wholesalers just took on new significance. Booking.com acknowledged last week that is was testing a new service – Booking.Basic – which features deeply discounted rates for certain properties sourced from other distributors (as opposed to the hotels themselves). While initial tests indicate that this new service is largely limited to Asia and features rates obtained from Booking.com partners Agoda and Ctrip, the obvious question is how widespread will this service become. Will the practices of certain wholesalers mean that deeply discounted net package rates will soon find their way to the Booking.com website? Time to review those sourcing provisions in your favorite Booking Holdings contract.

This week’s Update features a variety of stories, including an additional story on last week’s announcement by the UK’s Competition and Markets Authority regarding its recent commenced enforcement efforts against several unnamed OTAs operating in the UK. Our attempts to obtain a list of the OTAs targeted by the CMA were rebuffed last week, so we will just have to wait to see which distributors are in the CMA’s crosshairs. Enjoy.

Good News for Disabled Travelers and the Hoteliers That Serve Them
("Online Travel Players Boost Accessibility for Travelers With Disabilities," Skift Travel News, July 6, 2018)
Skift featured a story last week that detailed efforts being made by both existing and newly established travel websites to accommodate the many challenges experienced by disabled travelers (e.g. inaccessible websites, little or no description of accessible accommodations, etc.). Not only is this good news for disabled travelers, but also the many hoteliers that diligently seek to serve them. For years now, we’ve advised clients that the ADA’s booking requirements impose responsibility for satisfying those requirements solely on hoteliers – irrespective of whether those bookings are made directly with the hoteliers or indirectly through a third party channel. With these latest efforts by third party distributors, hoteliers may have one less concern keeping them awake at night.

This week’s Update features a number of “legal” updates to stories we have been following for some time. Enjoy.

CMA Initiates Enforcement Action Against Booking Sites
("Hotel booking sites could be forced to stop claiming ‘one room left’," Law360 - Hospitality, June 25, 2018) 
Following its nearly 8-month (re)investigation of online booking sites operating in the UK, the UK’s Competition and Markets Authority (CMA) announced last week that it was commencing enforcement actions against several unnamed “booking sites” over their alleged anti-competitive practices. According to the CMA, these questionable practices include (1) hotel rankings based on factors unrelated to a consumer’s requirements (e.g., commission levels), (2) pressure tactics that give consumers a false sense of availability, (3) misleading discount claims and (4) hidden charges. The CMA will now seek binding commitments from the offending sites or, in the absence of such commitments, pursue claims in UK courts. As part of its enforcement efforts, the CMA is also referring a number of its concerns to the UK Advertising Standards Authority (ASA) to examine whether the sites’ frequent claims of offering a “best rate guarantee” or the “lowest price” are misleading. It will be interesting to watch (a) how this enforcement effort unfolds and whether other European jurisdictions will soon follow suit – recall that the many anti-trust investigations that led to Booking.com’s and Expedia’s “narrow parity” compromise began with the efforts of CMA’s predecessor, the Office of Fair Trading, and (b) whether this effort results in any changes to global booking sites’ worldwide programs (e.g., Expedia’s Accelerator Program or Booking.com’s Preferred Hotel Programme). The official CMA news release is also available.