OFT ends price-fixing scam involving websites, hotel chains
01 Feb 2014
A hotel price-fixing scam in the UK that ripped guests through rooms on 'discount' websites has been busted following an investigation by the consumer watchdog.
The Office of Fair Trading investigation revealed some hotel chains had, in collusion with booking sites, to offer 'cheap' rates online that were really the same as the normal price.
People shopping around for cut-price rooms on the internet had therefore been wasting their time.
The OFT probe considered activities of the InterContinental Hotels Group, plus Booking.com and Expedia, with both sites entering into agreements with the chain that restricted their ability to discount the rate for room-only hotel bookings.
The OFT has now blocked the 'sweetheart' deals and all three companies have signed a legally-binding agreement to end the price-fixing regime, in order to avoid legal action.
It was hoped, meanwhile, that the move would drop rates 10 to 20 per cent.
However, according to some industry insiders, the new regime would not make much difference, as the agreement contained several small-print clauses which meant travellers would need to jump through hoops to make sure they get access to the best discounts.
Families would need to sign up to a membership scheme of the online travel agent (OTA) or hotel to view specific discounts.
The investigation by the OFT started in 2010 following a complaint by a small online travel agent called Skoosh.com alleging some hotel chains were preventing it from offering discount prices for room-only hotel accommodation.
The three companies investigated – the Intercontinental Hotels Group (IHG), Booking.com and Expedia have given an undertaking that all online travel agents dealing with them would be able to offer discounts off headline room-only rates.
Under the agreements which Booking.com and Expedia entered into with IHG, they were prevented from offering discount rates for room-only accommodation. The businesses had been accused by the OFT of breaking competition law relating to price fixing.
The competition watchdog focused on the three companies as IHG, which included chains such as Holiday Inn and Crowne Plaza, is the biggest international hotel company in terms of hotel numbers while Booking.com and Expedia are two of the largest online travel agents in the UK.
However, during the investigation, the OFT said the alleged practices were 'potentially widespread' in the travel industry.
