Duff on Hospitality Law

Good Sunday morning from Seattle . . .  Our weekly Online Travel Update (my last for the next 3 months) for the week ending August 2, 2024, is below.   Last week was a busy week in the online travel industry with second quarter earnings releases, junk fee updates and important competition announcements in the EU and UK.  Enjoy.

• • Highlights From Booking Holdings Second Quarter Earnings Release.  I won’t go into financial details from this past quarter’s release (that’s for the far more qualified analysts), but I will note a couple of my takeaways from the recent earnings release call (see attached transcript).  First, a definite focus on loyalty (Booking.com’s Genius program) and the noted increase (15% increase YOY) in Genius benefits (aka discounts).  It wasn’t that many years ago that I recall CEO Glenn Fogel dismissing the need for a loyalty program.  I chuckled when Glenn described the best part of the program – Booking pays nothing for it (suppliers pay for it all).  Second, Glenn’s and CFO Ewout Steenbergen’s opening remarks and the following analyst questions completely ignored Booking.com’s ongoing regulatory challenges in the EU – the DMA, recent Spanish fines, pending investigation in Italy, etc.  Not a single question about the anticipated effects of these ongoing developments.  What?  Third, how little was said (other than Glenn’s general optimism about and support for the platform) about Booking Holdings’ B2B programs – Booking.com, Getaroom and Rocket Travel. 
    
    
  • Are We Closer to a National “Junk Fee” Standard?  It appears so, yes.  This past week saw the United States Senate Committee on Commerce, Science and Transportation give its approval to the Hotel Fees Transparency Act of 2023.  The bi-partisan bill now moves to the full Senate for consideration and a vote.  If approved, the Senate version of the bill would then be reconciled with the previously passed House version (which passed out of the House back in June) and forwarded to the President for signature.  Before passing out of the Senate Committee, the bill was amended (at the urging of the Travel Tech Association and its members) to add language providing distribution platforms limited protection (a presumption) in the event hoteliers fail to provide accurate junk fee information.
    
    
  • Spanish Authorities Levy Fine Against Booking.com.  Much of last week’s attention (and industry reports) was focused on the Spanish competition authorities’ decision to fine Booking.com £413.24 and to impose certain “behavioral” modifications for abusing its market position over the past 5 years.  The practices that led to the fine include (1) imposing direct channel rate parity obligations while reserving the right to unilaterally adjust booking prices, (2) providing hoteliers inadequate information about participating in Booking.com’s Preferred, Preferred Plus and Genius Programs and (3) using the total number of reservations as a factor in determining a hotel’s ranking on the platform.  The modifications imposed by the Spanish authority are intended to address the “abusive” behavior.  Booking.com intends to appeal the fine arguing that the DMA is the proper forum for raising and uniformly resolving these types of issues across the EU (and not on a state by state basis). 

I hope everyone enjoys the remainder of their summer.  See you again in the fall. 

Good Sunday morning from Seattle . . .  Our weekly Online Travel Update for the week ending Friday, July 26, 2024, is below. It was a relatively quiet week this past week in the online travel industry, at least until Google’s (not surprising) announcement. Enjoy.

• • Google Changes Direction Again. So much for those many sessions (including my own) at recent industry conferences regarding marketing in a post-cookie world . . . Google announced this past week that it is abandoning entirely its previously announced decision to end all use of third-party cookies. The announcement comes after multiple prior announcements by Google delaying the planned demise. So why the change?  While Google’s announcement didn’t go into great detail, previous delays by Google (particularly the most recent) have been attributed to ongoing regulatory review of Google’s planned alternative – the Privacy Sandbox – by both privacy and competition regulators.  So, what is next? Again, the announcement did not go into great detail, except to say that users will soon have a choice regarding their web browsing practices. Google’s proposed alternatives are now under review by regulators.
    
    
  • Booking.com Found to Have Unlawfully Scraped Airline Website. In a unanimous decision out of a Delaware federal court this past week, a jury found that Booking.com unlawfully scraped data from travel supplier (and sometimes instigator) Ryanair. Booking.com’s activities were found to violate the U.S. Computer Fraud and Abuse Act. While the damages awarded to Ryanair were nominal ($5,000), the decision should provide a basis for Ryanair (and possibly other travel suppliers) to pursue injunctive relief against future similar behavior. Booking.com plans to appeal the decision.

Have a great week.

Good Sunday morning from Seattle... Our weekly Online Travel Update for the week ending Friday, July 19, 2024, is below. This week’s Update features a variety of stories, including news on the latest fines to be levied on Booking.com. Enjoy.

• • Recent Prime Day Travel Offerings Re-Kindle Amazon Rumors.  Regular readers of our weekly Update will recall the multiple stories we’ve featured over the years regarding Amazon’s rumored Interest in travel. Hailing from Seattle (like Amazon), I am asked often about Amazon’s interests at industry events and conferences.  As we noted in last week’s Update, Amazon again this year featured a limited offering of travel services as part of its annual Prime Day sale. Unlike prior years, this year’s offerings enjoyed their own dedicated “Prime Day Travel Deals” website page. Is this the beginning of a dedicated effort in travel? Only time will tell. In my opinion, absent a major acquisition by Amazon of an existing industry player, Amazon will only continue to play on the industry sidelines for the foreseeable future. 
    
    
  • Kayak Adds Features to Its Business Booking Platform. As competition in the corporate / managed travel space continues to escalate (see last week’s story on Marriott’s latest offering), Kayak announced this past week improvements to its Kayak for Business platform.  Users of the business platform will now have access to certain airline offerings (via API integration) and use of payment functionality.  Participating airlines include American, United and Southwest. 
    
    
  • Hungry Levies Record Fine on Booking.com. The Hungarian Competition Authority (GVH) announced last week that it had imposed a record fine on Booking.com for its failure to promptly cease certain previously identified commercial violations. The fine arises out of proceedings that commenced in 2018 when the GVH questioned Booking.com’s commercial practices – misleading free cancellation promises, psychological sales tactics and inaccurate payment information. In some instances, Booking.com took over four years to implement the required changes.

Have a great week everyone. Only two Updates remain before my upcoming departure. 

Good Saturday afternoon from Manson, Washington...I hope everyone is enjoying their holiday week/weekend, at least those of you in the United States. Our weekly Online Travel Update for the week ending Friday, July 5, 2024, is below. As you can seek, it was a quiet week. Enjoy.

• • HOTREC Releases 2024 Distribution Study. European hospitality association (representing hotels, restaurants and cares), HOTREC, released its annual hotel distribution study this past week.  Key findings of the study include (i) over the past year, OTAs have increased their share of the European market by an average of 10% (while direct channel distribution has decreased), (ii) small hotels rely Most heavily on OTAs, (iii) Booking.com enjoys a 71% share of the European hotel market, while Expedia is far behind at 15% and (iv) OTAs undercut hoteliers’ rates in 4 of 10 use cases examined. The association is cautiously optimistic that Booking.com’s recent gatekeeper designation under the DMA will produce meaningful results for European hoteliers in the months ahead.  A complete copy of the 2024 study is linked to our story below.
    
    
  • Kayak Launches Premium SME Offering. Kayak for Business has announced the launch of a new premium offering targeting small and medium sized businesses.  The new offering includes group bookings, 24/7 agency support and access to negotiated corporate rates.  Users will pay a flat $20 per trip fee.  The service can also integrate with a variety of additional services, including expense management and duty of care providers. 

Good Sunday morning from somewhere over Colorado . . . Our weekly Online Travel Update for the week ending Friday, June 21, 2024, is below. It was another relatively quiet week in the online travel space, except, that is, if you are Booking.com (or its parent, Booking Holdings). It has been a tough couple of weeks for the large OTA. Enjoy

• • When All Other Strategies Fail. It has been a tough couple of weeks for Netherlands based Booking.com. As the fallout of Booking.com’s recent gatekeeper designation under the EU’s Digital Markets Act (DMA) continues to unfold (including this past week’s announcement that it was abandoning all parity provisions for European hotels), an exasperated Glenn Fogel had little left to say other than that the EU’s rules were “dumb.” I’m sure we’ve all had weeks like that.

Have a great week everyone. I look forward to seeing many of you at the HSMAI event in Charlotte this week.

It was a busy week in the online travel world as evidenced by the number of our stories. Enjoy.

• • Cruise Operators Prepare for Total Pricing.  The recent announcement by some of the largest cruise companies to provide passengers total pricing (inclusive of all fees) underscores the breadth of California’s recently enacted pricing transparency law.  It isn’t just hoteliers and ticket agencies that need to comply.  Rather than limiting this change to California (or more properly, California consumers), the cruise companies plan to rollout total pricing nationwide.  The announced changes will go into effect on July 1, 2024.
    
    
  • ADA Booking Accessibility Rules at Issue in Recently Announced Marriott Settlement.  Federal prosecutors in Colorado announced last week a landmark settlement with Marriott over the booking of accessible rooms across the Marriott portfolio.  At issue were Marriott hotels’ alleged failure to provide needed detail about ADA accessible hotel rooms and the inability (prior to October 2022) to guarantee an ADA accessible room through Expedia.  As part of the settlement, Marriott has agreed, among other things, to list all of its accessible rooms through its centralized booking system, to provide details about each accessible room, to make accessible rooms available through the largest online travel agents (Expedia and Booking.com) and to allow Marriott Bonvoy members to book accessible rooms with points. The Colorado settlement agreement (a copy of which is embedded in the attached Skift article) will likely serve as a baseline for future enforcement and compliance efforts (similar to Marriott’s settlement with Pennsylvania regarding mandatory fee disclosures).  I’d encourage everyone to read it. 
    
    
  • OTAs Make Push for Corporate Travelers.  It should come as no surprise to our readers that the largest online travel agents (those that historically have focused primarily on leisure segment) are making huge pushes to capture a portion of the corporate travel segment, particularly in the SMB arena.  This recent trend is on top of efforts by other platforms to build better managed travel platforms (booking, payment, expense management, loyalty program recognition) – in many instances bypassing legacy GDS connections. 
    
    
  • Advocate General Questions Necessity for Parity Provisions.  In a precursor to an expected decision by the EU’s highest court, Advocate General Anthony Michael Collins suggested that Booking.com may find it difficult to prove that its controversial parity provisions are “indispensable” and “proportionate” to it maintaining its economic viability and thus exempt from EU competition law.  The preliminary opinion stems from a Dutch court case brought by German hoteliers seeking damages for Booking.com’s use of the illegal (at least in Germany) parity provisions.  Also at issue in the case is the definition of the relevant market for purposes of assessing the disputed clauses.  According to the Advocate General, the market needs to be viewed from the eyes of hoteliers and consumers (and not necessarily the eyes of the distributor).  Although not binding on the EU court, the opinions of advocate generals are often followed. 

This week’s Update features a variety of stories – STRs, algorithm leaks and Hilton campgrounds (sort of):

• • Las Vegas Price-Fixing Case Is Appealed.  A few weeks ago we reported on a Nevada federal district court’s (second) dismissal of a class action case brought against Las Vegas’ hoteliers’ over their use of certain Cendyn revenue management tools.  Not surprisingly, the plaintiffs have now appealed the court’s dismissal to the Ninth Circuit, the first such appeal of the several algorithmic cases currently pending against hoteliers.  A decision by the appeals court is not expected until 2025.
    
    
  • Booking.com Focused on U.S. STRs.  When it comes to short term rentals (STR), European online travel agent Booking.com is now taking a U.S. first approach.  During the first quarter of 2024, STRs accounted for 36% of all bookings on the platform.  To appeal to U.S. consumers, Booking is particularly focused on payments, liability insurance and its damage policy.  Families (however defined) are making up a larger and larger portion of users interested in STR bookings.
    
    
  • Air France – KLM Again Delays Introduction of GDS Surcharges for TMCs.  Fourth time the charm?  Air France – KLM has announced a further delay in its planned introduction of a €21 surcharge for corporate bookings made via legacy GDSs.  Why the additional delay?  Perhaps a lesson learned from American Airlines aggressive approach?  According to the airline, the delay is needed to resolve “issues” and to “support our partners.”  Last summer the airline removed all short-haul flights from GDS channels, reserving those routes for NDC connections.
    
    
  • Hilton RVs Officially Launched.  This one is of personal interest.  Not actually “Hilton” RVs, but close.  Users of Hilton’s booking channels can now search and book accommodations (RVs, tents, etc.) at several AutoCamp locations (Yosemite, Russian River, Cape Code, Joshua Tree, etc.).  Hilton Honors members can also earn and redeem points for their AutoCamp stays.  Having been part of similar efforts in the last few years, I can only imagine the discussions within Hilton as it considered the effects of adding this new non-hotel inventory to its regular online offerings – OTAs, wholesalers, loyalty program, etc. 

American Airlines’ decision to soften its approach on distribution with travel agents and advisors garnered most of the industry’s attention this week.  Otherwise, the holiday week for many was relatively quiet.  Enjoy.

• • Another Quarter and Another Staggering Amount Spent on Sales and Marketing.  According to their first quarter financials, the “Big Four” online travel agents (Expedia Group, Booking Holdings, Airbnb and Trip.com Group) spent a staggering $4.08 billion in sales and marketing in the first quarter of this year (a 10% increase over the same period last year).  How do these amounts compare to companies outside the online travel industry?  In the first quarter, the Big Four outspent their industry counterparts by a factor of 4 – when measured as a percentage of overall revenue (9.2% vs. 37%).     
  • A Few More Carrots Than Sticks:  American Airlines’ About Face.  Facing cuts in its financial forecasts, American Airlines announced this past week that it was moderating its historically aggressive NDC rollout.  According to American CEO, Robert Isom, the airline’s financial misses were due, in part, to its misguided sales and distribution strategy.  Going forward, American will seek to incentivize agencies’ and advisors’ use of its NDC platform as opposed to penalizing those who don’t.  As part of its newly announced change, American is reversing one of the most controversial aspects of its NDC campaign, the withholding of American Advantage loyalty benefits on bookings made through non preferred NDC advisors.   
  • Travel Technology Association Holds Its First Policy & Innovation Showcase.  Members of the Travel Technology Association held its first Policy & Innovation Showcase this past week for members of Congress and the media.  Companies presenting and/or hosting this event included Sabre, Airbnb, Tripadvisor, Expedia, Booking Holdings, Amadeus, Travelport and Chase Travel Group.  Issues currently on the Association’s agenda include the reform of the Communications Decency Act (Section 230), the American Privacy Rights Act and ancillary fee transparency.  According to comments by Association CEO Laura Chadwick, all travel companies are becoming technology companies. 

This week’s Update features a variety of stories, including interviews with two of the online travel industries major influencers, Ariane Goren of Expedia and Drew Pinto of Marriott.  I hope you enjoy. 

• • American Airlines’ War with Tour Operators Continues.  Responding to American Airlines’ newly (on May 13) enacted policies on cancellations and re-bookings, Tauck advised travel advisors this past week that it had stopped booking travel with American Airlines and other Oneworld members (including British Airways, Japan Airlines and Qantas).  The policies in question impose a $50 cancellation fee on cancellations beyond the 24-hour booking window and a $50 cancellation / re-booking (aka churn) fee on two or more churns.  
  • Southwest’s Distribution Evolution Continues – Flights Will Now Appear on Google Flights.  It was just last week that we featured a store detailing Southwest’s new partnership with Chase Travel, the first ever by Southwest to feature its flights on a third-party consumer facing booking platform.  Now, Southwest is moving to Google.  As of Wednesday last week, Southwest’s flights are now featured alongside other airlines on Google Flights.  Flights must still be booked directly with Southwest on the airline’s website.
  • Lotte Card Is the Latest Financial Institution to Launch a Travel Platform.  Joining the likes of Chase and Capital One, Korean card issuer, Lotte Card (9.35 million cardholders), has announced the launch of a new travel portal offering cardholders the opportunity to search and book accommodations, flights and car rentals.  The new platform will be powered by Hopper’s B2B division, Hopper Technology Solutions (HTS).
  • Hoteliers and Real Estate Information Firm Seek Dismissal of Anti-Trust Case.  In one of several algorithmic price-fixing cases targeting the hospitality industry, the defendants (six hoteliers and CoStar) moved last week to dismiss the claims, arguing that there was no evidence that the defendants had conspired to fix prices through the hoteliers’ use of CoStar’s (STR) long-used benchmarking tools.  As we noted in last week’s Update, a similar price-fixing case against Las Vegas casino / hotel operators was recently dismissed. 

Booking.com’s “gatekeeper” designation under the EU’s Digital Markets Act (DMA) and artificial intelligence’s increasing influence on online travel garnered much of the attention this past week.  Enjoy.

• • Chase Scores Major Win with Southwest Airlines.  Want to get away?  Chase Travel has a solution.  Chase Travel is the only online platform (not competing card companies or the major OTAs) to offer Southwest flights to online leisure bookers.  For years, Southwest subscribed to a direct channel only distribution strategy, but lately that strategy has been changing – albeit in small increments.  Does Southwest’s arrangement with Chase signal even greater future availability of Southwest flights on public online channels?  Only time will tell. 
  • Both Google and Expedia Announce New AI-Powered Trip Planning Tools.  At this past week’s annual Google developer conference, Google announced new and/or improved AI-powered trip planning tools for both Google Gemini  (the paid version of Google’s AI chatbot) and traditional Google search (through AI Overviews).  AI Overviews will be available to all Google search users this week, while the new Gemini tool will be available this summer.  Expedia also introduced AI-powered tools this past week at its annual Expedia Explore event.  New CEO, Ariane Gorin, speaking at her first Expedia Explore event, introduced Romie, Expedia’s new AI travel assistant that can help travelers with planning and booking travel.  What role will paid display advertising, key words and commissions play in these new tools?  Google hasn’t said.  When asked about the effect of commission levels on Romie, Expedia, CTO Rathi Murthy, said only that commissions don’t play a role – today.  Time for everyone to start thinking more broadly about search . . . and appropriate limitations.     
  • Booking.com Is a Gatekeeper.  Now what?  In today’s Update, we provide a number of perspectives on the EU Commission’s recent designation of Booking.com as a “gatekeeper” under the Digital Markets Act (DMA) for its online intermediation services.  With the EU Commission’s announcement, Booking.com now has 6 months to comply with the DMA’s applicable requirements.  In 6 months, Booking.com must submit a written compliance report detailing how it complies with the DMA requirements.   Other DMA obligations, including those associated with any merger or acquisition that Booking.com might wish to make, apply immediately.  In the months ahead, hoteliers should expect to hear from Booking.com as to how it intends to comply with the DMA’s requirements and how compliance will affect their existing distribution agreements.  Stay tuned.