Duff on Hospitality Law

Oregon’s legislature has broadened Oregon’s tax on short-term room rentals (also called the transient lodging tax). The new law, Enrolled House Bill (EHB) 4120, expands the scope of persons who must collect and remit the tax and file returns.

Background and Prior Law

EHB 4120 comes after a 2013 change in the law meant to treat third-party intermediaries on par with traditional hotels and motels. Apparently, the legislature now believes the earlier change did not go far enough—so in comes the amendment.

The old law and new law both require intermediaries to collect the tax along with short-term rental providers. But the old law defined intermediaries somewhat narrowly as those who simply facilitate and charge for short-term rental sales. While some intermediaries collected and paid the tax under this framework, that approach was not consistent across the market.

For example, some cities and counties reached voluntary agreements with certain intermediary companies to collect the tax; others had to rely on property owners’ individual compliance. Some intermediary companies took the position that the tax did not apply to them.

Washington lawmakers have decided that all types of lodging in King County should participate in funding the Washington State Convention Center. Since the advent of King County’s convention center tax in 1982, hotels and motels with 60 or more units have had to collect from guests not only the retail sales tax, but also the convention center tax. In Seattle, the convention center tax is 7 percent; in the rest of King County it is 2.8%. As smaller lodging facilities and short-term rentals have increased in popularity, it has become clear that exempting them from the convention center tax has been giving them an unfair basis for competing against larger facilities.

Our weekly OTA & Travel Distribution Update is below. This week’s Update features a number of familiar stories.

Australian Competition Authorities Re-Think “Narrow” Parity
("Narrow and wide parity clauses have same effects, ACCC chief says, amid renewed probe of online travel agents," Add source, March 23, 2018)
In comments at a recent anti-trust conference, Rod Sims, Chair of the Australian Competition and Consumer Commission (ACCC), noted that the widely-accepted “narrow” parity commitments offered by Booking.com and Expedia to resolve the ACCC’s earlier grievances were having the same effect on hoteliers as their broader predecessors. Sims’ comments come as Australian authorities continue their re-examination of the distributors’ practices, which began following the Australian Supreme Court’s ruling that airlines and distributors were competitors (and not principals and agents as claimed). According to Sims, the ACCC was disappointed to learn that hoteliers did not want to take advantage of the offline pricing opportunities afforded hoteliers under the narrow parity compromise.

This week’s abbreviated OTA & Travel Distribution Update is below and features stories on the biggest distribution players – Ctrip, Booking.com, and yes, Airbnb. Enjoy.

Ctrip’s Earnings Slip Following Regulatory Intervention (and that certain daycare video)
("China's Ctrip Blames Scandal, Business Curbs for Sales Shortfall," Bloomberg News, March 15, 2018)
Shares in Ctrip.com International Ltd. fell last week following release of the company’s forecast of 9-11% sales growth instead of the 16% forecasted by analysts. Ctrip’s reported fourth quarter revenues also declined. According to Ctrip, the declines were the result of both (a) regulators banning Ctrip’s automatic (and possibly misleading) bundling of air tickets and travel insurance (something we’ve written about previously) and (b) the now viral video showing daycare workers at a Ctrip employee daycare center abusing the children by, among other things, feeding the children wasabi.

This week’s OTA & Travel Distribution Update is below and is full of interesting stories. Enjoy.

Trivago’s Strikethrough Pricing Subject to AU Scrutiny [METASEARCH]
("Trivago flags Australian regulatory concerns over ‘strike-through’ pricing," MLex, March 7, 2018) (subscription required)
Trivago’s most recent SEC filing included an interesting note regarding its strikethrough pricing practices. According to the filing, the Australian Competition & Consumer Commission (ACCC) has requested documentation from Trivago regarding its practices. Although Trivago’s filing provides little detail about the investigation (and the ACCC has refused to comment), the ACCC’s actions raise some interesting questions about the widely used practice – one that has been subject to industry concern in the past. Whether the ACCC limits its investigation to Trivago or expands it to include other price comparison websites or distribution platforms will be interesting to watch.

This week’s OTA & Travel Distribution Update for the week ending March 2, 2018 is below. Nothing too remarkable in this week’s Oscar-shortened Update.

SwayPay Seeks to Simplify Payment Processing (and Reduce Fraud in the Process)
("How SwayPay Aims To Revolutionize Online Checkout," Forbes News, March 2, 2018)
A lot of attention has been paid these past few months to the many problems with online payment systems. Add SwayPay to the list of vendors purporting to solve these challenges. According to SwayPay, use of its application can reduce checkout time to 12 seconds (compared to 2-3 minutes for most other systems). Use of the application will also soon provide consumers instant discounts and cash paybacks. As for fraud, something the founders of SwayPay experienced personally during their time at online travel companies, payments are authorized through the use of biometric verification (fingerprint, iris and facial).

This week’s OTA & Distribution Update for the week ending February 23, 2018 is below. Other than Airbnb’s much publicized rollout of its 53 new product lines (an exaggeration, but not by much), last week was a relatively slow week in the world of distribution. Enjoy.

Airbnb Continues Its Evolution [SHORT-TERM RENTALS / OTA / LOYALTY]
("Airbnb adds loyalty program, site inspections as new rules restrict core business," USA Today - Technology News, February 22, 2018)
Anyone who follows the travel and lodging industries was inundated last Thursday with widespread reports of Airbnb’s many announcements at its recent host meeting. For those of you who didn’t bother to dig into the details, suffice it to say that Airbnb is steadily continuing its evolution into a traditional lodging company and/or distributor. Highlights of CEO Brian Chesky’s many announcements are below.

• • Introduction of four new property categories – existing listings will be divided into vacation homes, unique spaces, bed and breakfast and boutiques (which should work well with its recently announced partnership with Siteminder);
  • Introduction of two new service tiers - Airbnb Plus (subject to prior Airbnb inspection) and Beyond by Airbnb (luxury homes);
  • Introduction of new special “Collections” listings - Airbnb for Family and Airbnb for Work, initially, and new collections to come for social, weddings, honeymoons, group and dinner parties; and
  • Introduction of a new (and entirely undefined) membership loyalty program.

Not surprisingly, Airbnb’s announcement garnered the attention of the American Hotel & Lodging Association (AH&LA), which identified both Airbnb Plus and the new boutique product type as further evidence of Airbnb’s traditional lodging company DNA. If it walks and talks like a duck...

Our weekly OTA & Travel Distribution Update for the week ending February 16, 2018 is below. Loyalty and direct booking make an appearance again in this week’s Update after an extended absence.

Better Late Than Never:  Wyndham Joins the Loyalty Discount Program Bandwagon [LOYALTY/DIRECT BOOKING]
("Wyndham begins offering loyalty discounts", TopHotel News, February 15, 2018)
Wyndham finally announced plans this past week to offer discounted rates to members of its loyalty program, Wyndham Rewards. According to Wyndham, the planned discount of 10% will be one of the largest among Wyndham’s competitors. According to Geoff Ballotti, CEO of Wyndham, the delay in rolling out the discount program was attributable to many factors, including challenges with Wyndham’s technology platform, website and OTA contracts. Time will tell whether the planned discounts ultimately drive the direct booking volume necessary to outweigh their costs.

This week’s OTA & Travel Distribution Update is below and features a variety of stories – EU regulation, AI-powered chatbots, direct booking, connectivity and taxes.

German Coalition Plans for Increased Scrutiny of Online Platforms [EU REGULATION]
("Online platforms under scrutiny as German coalition eyes antitrust overhaul," MLex, February 7, 2018) (subscription is required)
Although the recent announcement made no mention of the many global or European online travel platforms operating in Germany, it is hard to see how online travel platforms will escape the scrutiny of the planned “Antitrust 4.0”commission. What this new commission means practically is hard to predict as Germany is already one of the few EU member states to find certain distributor’s rate parity provisions outright unlawful.

The Oregon Sports Summit, hosted by Eugene, Cascades & Coast Sports Commission, was held on February 2-3, 2018 at the Valley River Inn in Eugene, OR. The dynamic two-day conference included a mix of keynotes, programs and networking for potential and current sports events planners to create and further develop their events.

On Friday, February 2, I presented "Slips, Trips and Falls: Managing the Inevitable Risks of Any Sports Event", which covered topics including, (1) the key provisions of venue contracts, (2) participant waivers and releases, (3) service provider considerations, (4) sponsorship agreements and associated intellectual property issues and (5) privacy. My presentation is available for download below.

A big thank you for inviting me to attend and present!

If you have any questions, feel free to contact me at greg.duff@foster.com or at 206.816.1470.