Duff on Hospitality Law

With many in the industry getting their first look at Google’s proposed “DMA” changes to European Union search results, many of this past week’s industry headlines were focused on the proposed changes and the industry’s generally unfavorable response.

• • Increased Marketing Efforts by OTAs Result in Fewer Direct Bookings.  In a report issued last week by SHR Group, the hospitality industry technology specialist reports that increased marketing investments by OTAs have begun to shift the share of bookings away from direct channels to indirect channels, have driven higher the costs of brand key word bidding (particularly on meta search sites where costs increased by over 128%) and have increased OTAs’ share of total room nights (largely through OTAs generating longer lengths of stay).   
  • First Impressions of Google’s Proposed DMA Changes to Search.  With the Digital Market Act’s (DMA’s) ban on self-preferencing by so-called “Gatekeepers” set to take effect in early March (March 7), Google has begun rolling out on a limited test basis proposed changes to its EU search results for flights.  The responses have been less than flattering.  Leading the opposition to the proposed changes is online travel platform eDreams Odigeo, which has made quite clear that it believes the proposed changes do not go far enough and warrant enforcement efforts by EU authorities.  eDreams’ concerns have been echoed by other industry groups, including eu travel tech and EU Tech Alliance, which have largely focused on Google’s alleged failure to effectively engage with industry members before moving forward with the changes.  While most of eDreams’ complaints are focused on flights, it claims that similar concerns also apply to the proposed changes for hotels and activities / experiences.  I expect that we may hear from hoteliers soon. 
  • Still Suffering from Rogue Wholesalers’ Abusive Use of Rates and Inventory?  Expedia’s Peter Kern Has a Simple Solution.  Peter’s proposed solution?  Take the issue seriously.  That’s it.  Simple, right?  Speaking at the lodging industry’s annual investment conference, ALIS, Peter Kern (first OTA CEO ever to speak at the long-standing industry conference) expressed surprise that independent and regional hoteliers (noting that many large hoteliers have tackled the problem through solutions offered by Expedia – a plug for Expedia’s wholesale distribution program (Optimized Distribution)) don’t take the issue seriously.  If only it were that easy Mr. Kern. 

It was another slow week in the online travel industry as much of the industry’s attention was focused on this past week’s annual HEDNA Conference (in New Orleans) and preparation for the lodging industry’s first major conference of the year, ALIS.

• Hawaiian and Sabre Settle Things.  Readers of our Update will recall that Sabre sued Hawaiian Airlines for breach of contract back in the summer of 2022.  The suit was in response to Hawaiian’s decision to charge Sabre subscribers a $7.00 booking surcharge and to withhold certain content from Sabre and instead make that content available through Hawaiian’s own direct booking channels or Hawaiian’s NDC-enabled direct connect solution.  Sabre alleged that the decisions violated the terms of the parties’ agreement (which, depending on the date of the agreement, likely required parity among Hawaiian’s booking channels and prohibited the airline from discouraging subscribers’ use of the Sabre platform via surcharges, etc.) and breached the airline’s implied covenant of good faith and fair dealing.  According to Hawaiian, the surcharges and prioritizing of channels was part of the airline’s overall effort to modernize via the adoption of NDC.  Fast forward to last week, and the parties have now filed a formal dismissal of the claims.  No information about the settlement is available yet, but we will update our readers when more information becomes available.    

• European Regulators Seek Information on Booking.com.  Not only is Booking.com expected by many to fall under the Digital Markets Act’s (DMA) “gatekeeper” designation in the coming months, but EU regulators are now exploring whether Booking.com (and 16 other large online platforms and search engines (e.g., Bing, Facebook, Google and Google Maps)) is a “very large online platform” and therefore subject to the many requirements of the DMA’s sister legislation, the Digital Services Act (DSA).  If determined to be a platform under the DSA, Booking.com will be required to use consumer friendly terms and conditions and to provide consumers and regulators transparency with regard to its advertising, recommendation and content practices.  2024 may turn out to be a big year for Booking.com.

This week’s Update features one of several stories published this past week regarding the escalating fight between renegade airline Ryanair and several of the large online travel platforms.  We’ve also included a few stories on GDS platforms – one on Travelport and the other on one airline’s well-documented push to modernize GDS’ (and their users’) practices.  I expect to increase our coverage of GDS this next year, as I anticipate seeing a number of changes coming out of the GDS world over the next year or two.  Enjoy.

• • Ryanair’s OTA War Continues to Escalate.  Readers of our weekly Update are familiar with Ryanair’s ongoing battle with certain major OTAs (primarily Booking Holdings’ various platforms).  In response to recent criticisms by Ryanair over the platforms’ allegedly unjustified fees and charges (or perhaps pending U.S. litigation by Ryanair against Booking Holdings), the platforms (Booking.com, Kayak and Kiwi) have removed entirely the airline’s flights.  According to Ryanair, the airline expected to take a short term hit on revenue as a result of the “pirates” (Ryanair’s term, not ours) actions.  In response, Ryanair intends to make its lowest fares available on its own booking platform and those of “honest/transparent” OTAs.  Is there a lesson here somewhere for hoteliers? 
    
    
  • ASTA Takes (Again) Its Complaints Over American Airlines to the Department of Transportation.  The ongoing battle between the American Society of Travel Advisors (ASTA) and American Airlines continues.  In a December 20 filing, ASTA again asked the U.S. Department of Transportation (DOT) to investigate the airlines’ practices and to require American to restore the travel content that it previously removed (and presumably, made available only to travel agents via NDC connections).  According to ASTA, many of the same problems that existed immediately following American’s transition to NDC in April of last year persist today.  American in turn has argued that ASTA and its members need to modernize and move away from legacy technology (legacy GDS systems). 
    
    
  • Third Party Platforms Voice Their Support for Junk Fee Legislation.  In advance of the U.S. House Committee on Energy and Commerce’s consideration of proposed legislation on resort fees (the legislation passed out of the Committee on a 44-0 vote), the Travel Technology Association (membership comprised of OTAs, GDSs and other platforms) submitted a letter for the Committee’s consideration.  According to Association CEO and President, Laura Chadwick, the legislation will help “reign in their [hoteliers] troubling resort fee practices.”  Interestingly, while the Association favors the proposed legislation, the Association also asked to add provisions holding hoteliers (not the platforms) responsible for failing to display correct resort fee information.  A complete copy of the Association’s letter is available here.