Duff on Hospitality Law

With earnings season upon us, it was difficult to limit this week’s Update to just 12 stories. For those of you seeking a deeper dive into the latest on online booking platforms, Expedia Group and Booking Holdings I encourage you to take a look at the Expedia Group and Booking Holdings call transcripts. Enjoy. 

Expedia Updates
(“Expedia Unveils New Strategy,” May 6, 2022 via Hotel Business)
(“Expedia Group Revenue Jumps 81 Percent as Travel Recovery Continues,” May 2, 2022 via Phocus Wire)
(“Expedia Group Revamps Marketplace, Tech Platform as Part of New Strategy,” May 4, 2022 via Phocus Wire)

Last week not only saw the release of Expedia’s first quarter earnings report, but also the hosting of Expedia’s annual partner conference – this year titled Explore. Here are my key takeaways from this past quarter’s earnings release and reported Explore highlights:

• • While Expedia’s quarterly financial performance still lagged behind 2019, recent months (starting with February) have exceeded same month comparisons to 2019.
    
    
  • Traveler demand is returning stronger than ever, despite the emergence of COVID variants, the war in Ukraine, inflation, etc. In CEO Peter Kern’s words, the recovery “seems too strong to be held down.” Demand is also starting to return across multiple segments, including CBD business and business travel.
    
    
  • VRBO continues to enjoy unprecedented success, performing now at levels above 2019. Supply constraints remain a concern, particularly in key markets.
    
    
  • Expedia’s B2B business (most notably, Optimized Distribution) continues to gain traction (particularly with the recent enrollment of IHG) and is now a major focal point for Expedia’s future growth. Expect increased interest in enrolling supplier partners of all sizes in Expedia’s B2B program.
    
    
  • When discussing Expedia’s latest quarterly marketing investments, Peter referred repeatedly to efforts now focused on developing longer term relationships with its travelers and the “lifetime value” of such travelers. According to Peter, “the industry has been very transactionally focused and we haven’t been great historically at measuring lifetime value...” Sound familiar? Sounds like Peter may have stolen a page or two from hoteliers’ song books on the real value of direct channel bookings (and their associated investments) versus the “transactional” bookings often sourced through third party online channels.
    
    
  • At last week’s Explore event, Expedia launched its new technology platform, Expedia Group Open World. This new platform will allow partners of all shapes and sizes to contribute products, services and content to the overall traveler experience.  Expedia also revealed its new reimagined marketplace, which, among other things, will now rank individual hotels (which ranking then affects display and sort order) by a new guest experience score – which takes into consideration guest reviews, customer service interactions, etc. And in a nod to Hopper and its incredible success these past few years, Expedia is also launching a price predictive tool that will allow users to track historical and anticipated future rate changes for both air (today) and hotel rooms (later this year).
    
    

Last week’s Update features a variety of stories, including FlightHub’s attempt to resurrect its reputation and US Airways’ latest claims against Sabre. Enjoy.

FlightHub’s Latest Pitch: Trust Us
(“OTA that was charged a record DOT fine insists it is trustworthy,” April 25, 2022 via Travel Weekly)
When considering the many factors that one may use to evaluate a potential distribution platform, trustworthiness is really overblown. At least that’s the current pitch of FlightHub (parent company to both JustFly.com and FlightHub.com). Just weeks after receiving the Department of Transportation’s Office of Air Consumer Protection’s largest fine (which comes on the heels of a similar settlement with the Canadian Competition Bureau over similar conduct), FlightHub is in full damage control mode. In both instances, the consumer protection agencies alleged that FlightHub’s OTAs misrepresented fares, cancellation charges and ticket refunds and bag fees. Interestingly, FlightHub CEO, Chris Cave, claims that these “voluntary” settlements are the best possible evidence of FlightHub’s commitment to full transparency with its travelers. Huh? 

We begin this week’s Update with the promised overview of the DOJ’s recent guidance on the ADA and website accessibility. Enjoy.

Expedia Group’s Trivago Fined for Misleading Room Rates
(“Trivago fined for misleading consumers on hotel room rates,” April 22, 2022 via Hotel Management Network - Top Stories)
Last week, the Australian Federal Court fined metasearch platform, Trivago, $44.7 million for its misleading claims about rates on its website and in television advertising. The decision culminates an extensive investigation by the Australian Competition and Consumer Commission (ACCC) that began 2018. At issue was Trivago’s use of an internal algorithm that produced search results based on the cost-per-click (CPC) fees paid Trivago by booking sites (the higher the fees paid, the better search placement) and not, contrary to advertising by Trivago, on the lowest available rates. As part of the investigation, Trivago admitted that use of the algorithm caused consumers to overpay approximately $38 million to booking sites. 

Last week was all about loyalty as we saw a number of stories on the new roles that technology and online platforms are playing for hoteliers seeking to update and expand (or even launch) their loyalty programs. We include three of those stories in this week’s Update. Enjoy.

Technology Powers Loyalty Program Growth
(“IHG introduces new loyalty program,” April 13, 2022 via Hotel Business)
 (“Tech is powering the new look of hotel loyalty programs,” April 16, 2022 via Phocus Wire)
(“Fintech to Help Smaller Hotel Brands Like Selina Launch Rewards Cards,” April 13, 2022 via Skift) (subscription may be required)
This week, we feature three separate stories detailing the important role that technology (and online platforms) is playing in updating existing and launching new loyalty programs.

• • In recent weeks, both IHG and Accor have announced major updates (in the case of IHG, a complete overhaul) to their loyalty programs. In the case of IHG and its new IHG One Rewards program, the program is centered on IHG’s mobile application and now allows members to customize the rewards they receive through another online platform, Milestone Rewards. The newly constituted program, including Milestone Rewards, is expected to be available in June. Accor also recently announced changes to its loyalty program Accor Live Limitless (ALL) through a new partnership with online entertainment platform Fever, which will allow members to use their loyalty program benefits to book a variety of activities and experiences.
  • Lastly, Skift explains how fintech startups are allowing smaller hotel and travel companies (Selina) to launch new co-branded payment cards (to boost their fledging loyalty programs) in under a month. In Selina’s case, its planned card will feature cash rewards for signing up, loyalty program points and cash rebates for hotel stays. 

This week’s Online Travel Update features a variety of stories, including a follow up story on Uber’s ongoing transition from ride hailing app to super app. Enjoy.

Groups360 Raises an Additional $50 Million
(“Groups360 attracts $35 million, plots group travel platform expansion,” April 8, 2022 via Phocus Wire)
Groups360 announced recently that it raised an additional $50 million in funding. The group booking platform was started in 2014 and in 2019, received a $50 million investment from hoteliers Accor, IHG, Hilton and Marriott. Groups360 plans to use this latest investment to further its expansion across EMEA and APAC. Groups360’s main offering, GroupSynch, allows users to book guest rooms and meeting rooms entirely online – similar to competing online offerings from CVENT (Instant Book), Hotelplanner and others. From our perspective, the first company to offer reasonable contracting terms that recognize hoteliers’ concerns generally regarding online distribution, will likely have a huge advantage.

On March 25, 2022, after a contentious, four year-long court battle, a jury awarded Stone Brewing Co. $56 million in damages against beer conglomerate MillerCoors, now Molson Coors, finding that MillerCoors infringed the craft brewery’s STONE trademark. Though Stone Brewing initially sought $256 million in damages, the brewery’s co-founder, Greg Koch, celebrated the verdict as a major victory, calling it “a historic day for Stone Brewing, and for the craft beer industry.” For brand owners, this decision underscores the importance of protecting one’s trademark rights. 

Stone Brewing first filed the trademark infringement lawsuit in 2018, alleging that MillerCoors intended to trade off of the goodwill and recognition of Stone Brewing’s STONE brand when it rebranded its Keystone beer to emphasize the word “stone.” Indeed, MillerCoors’ rebranding changed the overall appearance of the word “keystone” on its packaging and advertising, separating the words “key” from “stone,” and making the word “stone” more prominent. Notably, this rebranding came after MillerCoors tried to register the trademark STONES in connection with its beer in 2007. The U.S. Patent and Trademark Office denied this trademark application on the basis that there was a likelihood of confusion with Stone Brewing’s STONE registration. Stone Brewing pointed to this attempted registration as evidence that MillerCoors’ later rebranding constituted willful infringement.

After a few quiet weeks, last week produced a number of stories that caught our attention and made it into our weekly Update, including two interesting stories on customer reviews. Enjoy.

Booking.com Adds Loyalty Program Benefits
(“Booking.com Adds a Third-Level of Benefits to Its Loyalty Program,” April 1, 2022 via Hospitality Net - Latest Industry News)
Booking.com announced last week that it was adding a new, third tier to its Genius loyalty program. Members qualifying for this new level will enjoy discounts of up to 20 percent (as compared to discounts of 10 percent and 15 percent for first tier and second tier members, respectively), free upgrades (at participating properties), free breakfast (also at participating properties) and priority customer support (with live service agents). With this latest announcement, suppliers should again expect a big push by Booking.com to grow the number of properties in its loyalty program. Market managers will be busier than ever in trying to convince individual properties to offer deeply discounted “Genius” rates. 

As the short list of stories below reveals, last week was another quiet week in the online travel world. Enjoy.

Hopper Is the Fastest Growing Travel App in 2021
(“Hopper outperformed all other OTA apps in 2021,” March 25, 2022 via Phocus Wire)
By now, we probably shouldn’t be surprised. This past year has been quite a year for the online booking platform and fintech purveyor. Powered by the popularity of its fintech products (on average, every user purchases two fintech products with each booking), Hopper was not only the fastest growing travel app in 2021 (growing 494 percent), but in June, it bypassed Airbnb as the market share leader for active users. The other better known booking platforms also enjoyed strong growth this past year with Expedia (coming in second) growing 49 percent, Expedia’s Hotwire (coming in third) growing 33 percent and Booking.com (coming in fourth) growing 23 percent. Expedia’s vacation rental platform, Vrbo, also faired well, growing active sessions on its app by 43 percent (outpacing Airbnb) and in February this year, enjoying 1.5 million new downloads of its app. Overall, apps featuring vacation or home rentals faired better this past year versus those travel apps that did not.

Sustainability in Travel Takes Another Step Forward
(“Booking Holdings Publishes Climate Plan,” March 22, 2022 via MarketWatch)
While politicians may still debate climate change and its effects, it is becoming increasingly clear that major travel companies seeking to appeal to a younger customer base that increasingly takes climate change and sustainability seriously, are not. The latest evidence...Booking Holdings recently published its first ever climate action plan detailing the steps it intends to take to achieve near zero emissions from operations by 2030. As part of its effort, Booking’s brands intend (like so many other platforms recently) to make it easier for users to identify and book sustainable travel options.

Canada Jetlines Chooses Fareportal
(“Fareportal OTA's Chosen as Canada Jetlines First Travel Agency Partner,” March 14, 2022 via Yahoo Finance)
Interesting announcement, particularly given our story from last week.

This week’s Update features a variety of topics, including Fareportal’s deceptive sales tactics and Expedia’s self-proclaimed collaborative approach. Enjoy.

Kayak Grows Development Team
(“People on the move at KAYAK, ESA,” March 18, 2022 via Hotel Business)
While some of us might have thought that Kayak’s foray into brick and mortar locations was going to be short lived, Kayak’s announcement last week that it had hired industry veteran Indy Adenaw as Kayak Hotels’ new managing director to lead Kayak’s global expansion suggests otherwise. According to the announcement, Kayak expects to add 10 new Kayak “powered” properties this year.

Fareportal’s Use of “Dark Patterns” Results in $2.6 Million Payment
(“Attorney General James Secures $2.6 Million From Online Travel Agency for Deceptive Marketing,” March 16, 2022 via New York - Attorney General – News)
New York Attorney General, Letita James, announced last week that her office had secured a $2.6 million payment from Fareportal, operator of several discount booking platforms including CheapOair.com, related to FarePortal’s use of deceptive and misleading sales (“dark patterns”) tactics since 2017. The offending tactics were far reaching and included, among others, falsely representing the number of rooms that had been booked in a particular market, fabricating information about consumer demand for travel products and services, and posting misleading statements regarding service fees and cancellation policies. In addition to paying $2.6 million, FarePortal agreed to ensure that all future online messages, price comparisons and product disclosures would use only accurate and real time data.

As you can see from our stories below, it was a rather quiet week for online travel. Enjoy.

Want to Play a Game While You Book That Vacation Package?  
(“OYO, Hopper bet on gamification to drive user retention,” March 7, 2022 via Phocus Wire)
Yes, another story about Hopper. Last week, Skift ran an interesting story on plans by both OYO and Hopper to incorporate games into their booking platforms. Both companies view games as a means to higher user retention and ultimately to achieving the much-desired super app status. According to Hopper, it is exploring both “game theory” (using rewards to drive desired outcomes) and actual games that entertain users and drive repeat visits (and ultimately, bookings). The Chinese e-commerce site, Pinduoduo, is one example that Hopper identifies where game theory and actual games have led to significant numbers of repeat users. Rather than investing in paid search marketing (like the majority of Hopper’s major booking platform competitors), Hopper is exploring using its marketing resources to reward frequent users with discounts and other financial rewards.