On 31 January 2014, the UK Office of Fair Trading (OFT) ended its case involving online travel agents (OTAs) Booking.com and Expedia Inc, together with InterContinental Hotels Group, by accepting commitments from the companies to change their business practices in the UK.
The OFT's investigation centred on competition concerns that Booking.com and Expedia had both entered into separate agreements with IHG which restricted their ability to discount the rates at which room-only hotel accommodation bookings are offered to customers. This was therefore a resale price maintenance case. The OFT was not looking at “best rate guarantees” or “rate parity” arrangements of the type being looked at by other EU member state competition authorities.
The commitments mean that all OTAs and hotels that deal with these three businesses will be able to offer discounts off headline room-only rates in certain cases (which have to be driven by the customers). OTAs do not take title to or hold inventory to hotel accommodation. They operate under a merchant model (margin-based) or a commission-based model. The discounts offered by OTAs will be funded through their commission or margins.
Although the case involved only these three companies (which are important in the sector in the UK) the principles can be assumed to apply generally. The principles will also apply to any similar business models in other industries, so will be of wider application.