Duff on Hospitality Law

This week’s Update features a number of updates on previous stories, including our recent story on Expedia’s apparent abandonment of indirect and direct channel rate parity provisions in Australia. Enjoy.

Expedia Abandons Rate Parity in Australia
(“Expedia's scrapping of all MFNs followed Australian official's public smackdown of platforms,” May, 2020 via MLEX Insight)
For those of you with properties in Australia still operating under Expedia’s narrow version of rate parity adopted in 2016, I have good news. As we reported two weeks ago, Expedia has in fact agreed – without a request from, or consultation with, the Australia Competition & Consumer Commission (ACCC) – to remove all rate parity provisions from its contracts with Australian hotel suppliers. Although the change did come at the request of the ACCC, it’s clear that pressure from the ACCC beginning back in 2018 may have been behind Expedia’s decision. With the change, Expedia is no longer the subject of the ACCC’s ongoing investigation into travel platforms’ use of the often controversial provisions. As noted in our initial story, Booking.com however remains the subject of ACCC’s investigation.

Because many hotels and resorts hold Federal Communications Commission (“FCC”) licenses for the wireless radios that employees use for daily communications on property, the next property acquisition or sale may have more regulatory hoops than you realize. In fact, if a property holds FCC licenses, the property can’t be bought or sold without the FCC first consenting to the transfer of control of the radio licenses.

This week’s Update contains updates on several fronts, but begins with a story that I found thoroughly depressing, but summarizes, perhaps better than any other story I’ve seen in recent weeks, the current state of the travel industry. According to reports (now confirmed), The New York Times plans to stop temporarily printing its weekly travel section in its Sunday print edition. The sports section is facing a similar fate. In their spots, the paper will instead publish a new Sunday section titled, “At Home.” Wait, what? Now, I completely understand the decision and appreciate the circumstances that made this change necessary practically, but the complete disappearance of travel from this Sunday morning staple for so many speaks volumes. The complete article is available on Skift Travel News’ website.

Now, back to distribution…

In this week’s Update, we’ve highlighted another story on a lodging industry leader who is taking the necessary precautions to prepare itself, other industry members and, ultimately, travelers for the post COVID-19 world.

Expedia Agrees to Remove Narrow Rate Parity Provisions
(“Expedia parity-clause probe dropped, Booking.com review continues, Australian watchdog says,” MLEX Insight on Apr 16, 2020)
In a very brief statement announced last week, the Australian Competition & Consumer Commission (ACCC) suspended its ongoing investigation into Expedia due to Expedia’s dropping of its “narrow” or direct channel rate parity provision in supplier contracts. Notably, with that same announcement, the ACCC made clear that its ongoing investigation into Booking.com was continuing. Hoteliers in Australia may soon be able to fully yield manage – on the basis of both rate and inventory – this important channel.  

This past week, we saw a number of stories (including the one listed below) describing Booking.com’s potentially precarious financial position, which reveals just how broad of an impact this pandemic is having on the travel industry. Suppliers, with their massive capital investments, are often the first to suffer. When the entire world stops traveling for weeks at a time, however, the entire travel ecosystem suffers. Let’s hope we beat this thing soon. Stay safe and healthy everyone.

UK’s Competition and Markets Authority Considers Unilateral Cancellation Policy Changes
(“Expedia, Booking.com scrutinized by UK's CMA over Covid-19 contract changes,” MLEX Insight on Mar 30, 2020)
For the past few weeks, we’ve included stories about several travel platforms’ – both OTAs and short-term rental platforms – decision to implement unilaterally traveler-friendly COVID-19 cancellation policies. While many of these policies were consistent with already announced brand policy changes, these policies had a potentially disastrous effect on independent hoteliers, particularly those that may rely disproportionately on advanced purchase or non-refundable rates. This past week, the UK’s Competition and Markets Authority (CMA) received a complaint from the UK’s Bed and Breakfast Association arguing that these new policies are illegal, unfair and constitute an abuse of power. No official response yet from the CMA on whether it plans to open a formal investigation into the changes.

In this week’s Update, I’ve again included a larger than normal number of stories given the interesting updates we are seeing. Not all the updates may be directly related to traditional distribution, but there is a connection. If there are particularly topics that you would like us to cover in future updates, please let us know. Enjoy.

Is Trip.com the Canary We Should All Be Watching?
(“What’s Next for Trip.com Group as Coronavirus Crisis Subsides in China?,” Skift Travel News on Apr 1, 2020)
Yes, another story on Trip.com (f/k/a Ctrip.com) and its efforts post-COVID-19. As the industry seeks clearer direction on what things will look like in the days, weeks and months after COVID-19, Trip.com has become the industry’s unofficial canary. Last week, Skift sat down with Trip.com CEO Jane Sun to get her firsthand perspective on COVID-19 and the rebounding travel market within China. Sun confirms that the “green shoots of recovery” are definitely underway in China, at least with regard to domestic travel. As the COVID-19 pandemic subsides, Sun describes the next big challenge as reestablishing the confidence of Chinese consumers to travel again. Whether this means offering products to only those countries that have demonstrated an ability to control the virus or endorsing a national “health code” that identifies those healthy enough to travel, Trip.com is exploring a variety of options. I encourage everyone to take the time to read the interview.

In this week’s Update, we’ve included a greater number of stories than usual given the  quantity and variety of available stories pertaining to COVID-19.

Stay safe and healthy. Together, we will get through this.  

Travel Intermediaries Accused of Leaving Travel Agents Hanging
(“Travel Agency MisterFly Slams Airlines for Delayed or Denied Refunds,” Skift Travel News on Mar 27, 2020)
Over the past few weeks, much has been written about the questionable cancellation practices of several European airlines. Notwithstanding EU regulations requiring airlines to refund travelers for canceled flights, many cash-starved airlines are only issuing credit “notes” for future travel. Travel agents and tour operators, facing demands for refunds by their clients, are now caught in the middle and demanding intermediaries (International Air Transport Association (IATA)) to do something about it.

What a week it has been. For those of you working around the clock to retain some semblance of your business and the travel industry together, we stand alongside you. Each day that passes brings with it a wave of new cancellations, news of mass furloughs or layoffs and, most recently, property closures. If we can help any of you deal with this onslaught, please let us know. We are trying to devise creative ways to support all of our clients through this incredibly tough period. 

Through all of this, we will continue to share those stories that we believe may provide direction as you continue to move forward. If there are topics of particular interest that you think we should include, we would love hear from you.  

Yesterday, March 23, 2020, Washington State Governor Jay Inslee announced that he will sign the statewide Stay Home, Stay Healthy Order (the "Order").

The Order requires every person to stay at home (unless they need to pursue an “essential activity”); bans all gatherings for social, spiritual and recreational purposes; and closes all businesses, except for “essential businesses.”

With all that has occurred in these past few weeks involving coronavirus (and its devastating effects on the travel industry and those within it), I had questioned whether I should suspend our weekly Updates until things have settled. After some consideration, I believe that there is probably no better time to provide this important information to our readers as they inevitably re-evaluate (and then re-evaluate again) their near-term and long-term plans for this new altered reality. I hope in some small way that our continued Updates are informative and helpful. If I can do things better or different, please let me know.