Duff on Hospitality Law

This week's Online Travel Update is below.  As evidenced by the number of stories in this issue, it was a busy week in the online travel world, ending with what appeared to be a distributor dogpile on competitor Hopper.  Enjoy.

• • Expedia Terminates Hopper; Kayak Joins Scrum.  Thursday’s industry headlines were dominated by news of Expedia’s termination of its hotel and vacation rental supply agreement with industry upstart Hopper (and by extension, its many white label B2B partners, including Capital One). While Expedia attributed the termination to concerns over consumer “confusion and anxiety,” Hopper and industry pundits were quick to point to Expedia’s likely growing competition concerns.  Sensing blood in the water, Kayak’s CEO, Steve Hafner, gratuitously jumped into the fray supporting Expedia’s decision to terminate.  Suppliers that rely on Expedia as their exclusive B2B distribution platform (or that are considering such a relationship in the future) must ask what such a termination might mean for them as a potentially important channel is terminated.   
    
    
  • TUI Unveils Package Offerings.  Travelers in the UK have a new (old) hotel booking option.  In June, European tour operator, TUI, known historically for its travel packages, launched a standalone platform in the UK.  By the end of the year, TUI expects to have over 30,000 hotels available on the platform for standalone bookings (together with bookings of other individual travel components).  Suppliers, it is time to review those existing tour operator agreements.     
    
    
  • Priceline Partners with Amazon for Prime Day.  While Booking Holdings has partnered in the past with Amazon to offer Amazon’s prime members discounts or other special benefits, Priceline’s partnership with Amazon to provide Prime members special U.S. Prime Day discounts is a first. 
    
    
  • Finnair Concedes to OTA Discounts.  In response to an ongoing investigation by the Swedish Competition Authorities, Finnair has agreed to no longer restrict how OTAs advertise and sell discounted flights on their websites.   Whether this decision by Finnair is instructive as to how competition authorities might view similar efforts by hoteliers (whose relationships with OTAs are considerably different than airlines’) remains to be seen. 

This week’s “vacation edition” Update features only two stories, the subjects of which have been featured in prior Updates. We will be back with our regular Updates next week!

For those of you in the U.S. and Canada, happy Independence Day. This week’s Update features a number of important legal updates – both in the U.S. and in the EU.  The next 6-9 months should prove to be interesting as the EU moves forward with the implementation of its new digital legal framework – the Digital Services Act (DSA) and Digital Markets Act (DMA).  I hope you enjoy.

• • FTC Identifies Possible Competition Concerns with Generative AI.  This past week, the FTC published a blog post detailing its view of potential competition concerns with generative AI.  Key building blocks identified by the FTC for the successful use and implementation of generative AI (and all favoring large industry incumbents over new industry participants) include (1) data, (2) talent and (3) computational resources.  Identified areas of concerns include a number of “industry standards” seen with prior emerging technologies – control of critical inputs, bundling and tying of products and services and exclusive dealing.  Here we go again.
    
    
  • First Fraud, Now Chargebacks.  Having heard firsthand this past week while at HSMAI’s events in Toronto of hoteliers’ growing frustration with chargebacks, I wasn’t surprised by the results of Outpayce’s (Amadeus payments business) recent survey of travel executives, which, among other things, detailed the travel industry’s growing chargeback challenge.  According to the survey, over two thirds (71%) of the respondents have seen an increase in chargebacks with 33% experiencing a growing number of chargeback disputes over the past year.  According to the survey, respondents attributed the increase to a number of factors - (1) consumers view that the chargeback process is easier (thanks in part to mobile banking apps) than refunds and (2) consumers’ increased awareness of chargebacks generally. 
    
    
  • Booking.com Designated a “Very Large Online Platform” Under DSA.   As many wait to learn Booking.com’s fate under the DMA (i.e., whether Booking.com will be designated a “Gatekeeper”), it is important to remember that Booking.com has already been designated a “Very Large Online Platform” (VLOP) under the DSA.  Back in April of this year, the EU Commission announced its decision that Booking.com satisfied the 45 million monthly active user threshold to be designated a VLOP.  Why is this important?  First, Booking.com’s designation as a VLOP may be a telltale sign of its pending gatekeeper designation.  Second, recent events may provide some indication as to how Booking.com might challenge (and ultimately delay) its VLOP designation or possible future gatekeeper designation.  Late last month, German online retailer Zalando, also a recent VLOP designee, filed suit appealing its designation, arguing that its unique hybrid model (combining both retail and platform businesses) caused it to fall well below the 45 million user threshold.  What effect Zalando’s claims might have on its designation or its eventual compliance with the many VLOP content requirements is unclear, but we may soon see other designees – Booking.com – following Zalando’s example.

For those of you who attended HSMAI’s events this past week in Toronto, it was great seeing so many of you at Monday’s roundtables.  I hope each of you got as much out of our sessions together as I did.  Have a great week.

This week’s Update features a wide variety of stories, including two on the growing influence of fintech products and their suppliers:

• • Google and TikTok Out as Travel Planning Tools?  A recent survey of U.S. travelers by travel publisher Matador Network (and owner of AI powered travel assistant, GeekGuide) revealed that more than a third of travelers intended to use AI to research or plan travel. 

• • Buy Now, Pay Later Becomes Save Now, Buy Later.  Online travel agent, CheapOAir, has launched new fintech tools that allow travelers to save for future travel purchases on the online platform (a/k/a layaway).  Users of the new tool can receive cash incentives of up to 6%.  Fintech company, Accrue Savings, powers the program, and amounts deposited will be insured through Blue Ridge Bank. 

• • Additional Details Emerge Re Regulators Concerns Over Booking Holdings’ Planned Purchase of ETraveli.  Since late 2021, we’ve been covering Booking Holdings’ planned purchase of European online platform ETraveli.  EU regulators expressed concern late last week about the effect of the planned purchase, specifically with regard to hotels as Booking’s growing market position among competing online platforms would lead to higher costs for hotels and ultimately consumers.    

Have a great week everyone.  We will be offline next week as I head out to Toronto for HSMAI’s week of events.  I hope to see many of you there. 

This week’s Update features a variety of stories, including an update on the major online booking platforms’ latest quarterly marketing efforts. Highlights include:

• • Big Three Spend a Combined $3.5 Billion on Marketing in the First Quarter.  Booking Holdings, Expedia and Airbnb spent a combined $3.5 billion on marketing during the first quarter of 2023, almost a billion more than the same period in 2022.  When measured against quarterly revenues, Expedia’s quarterly marketing spend was the largest (63% of quarterly revenue) with Airbnb spending the least (just 25% of quarterly revenue).  Rival Booking Holdings spent 39% of its quarterly revenue. 
    
    
  • Priceline is the Latest Online Platform to Announce Implementation of AI.  This past week, Priceline announced it was partnering with Google Cloud to implement generative AI into multiple areas of the platform’s business.  The planned integrations will be both consumer facing (e.g., a conversational AI powered chatbot to assist users in creating itineraries and selecting accommodations) and internal (e.g., a marketing platform that develops copy and images for use across the company’s channels).  Priceline is only the second travel platform to announce its use of Google’s AI products as the majority of announcements to date by online travel platforms have been for OpenAI, the makers of ChatGPT.
    
    
  • Capital One Continues to Expand its Travel Platform.  Capital One announced this past week that it was acquiring online concierge company, Velocity Black, which will expand the financial institution’s ability to offer experiences to its growing user base. 
  • Expedia’s AI Advantages Short Lived.  Readers of our Update might remember recent statements from Expedia Group’s Barry Diller claiming that Expedia had an advantage over its competitors in the adoption of AI, in part, because OpenAI’s CEO, Sam Altman, was a member of Expedia’s board.  Any advantage that Sam’s presence on the Expedia board might have provided was relatively short lived as Sam announced this past week that he was stepping down from the Expedia board. 

For the first time, our weekly Update delves into the world of artificial intelligence (AI).  We’ve tried for several months now to avoid joining the chorus of voices proselytizing about the likely effects of AI, but as the reality of AI starts to set in and its potential uses become more apparent, it is impossible to avoid.  Expect to see more stories in the future on AI (and its likely legal implications) as curated by my colleague and contributor Erin Snodgrass.  I hope you enjoy.

• • Priceline’s New Head of Accommodations Outlines Her Plans for the Future.  Priceline’s new Senior Vice President and Head of Accommodations, Traci Mercer, shared her thoughts about the future of the Booking.com little sibling in a recent interview with PhocusWire.  Highlights from the recent interview include:
    • 2023 marks Priceline’s 25th year anniversary
    • North America, particularly, the United States is Priceline’s current top priority for growth
    • From a supplier perspective, both Priceline and Agoda will continue to work together – at least in North America
    • Priceline Partner Solutions (Priceline’s B2B offering) will remain a growth opportunity as Priceline seeks to leverage its recent acquisition of Getaroom

• • Expedia Calls Out Agoda’s Abusive Discounting Practices.  While we’ve grown accustomed to suppliers’ complaints over the years about the business practices of online distributors, it has been unusual to see online distributors questioning the practices of their competitors.  In a recent interview, Expedia’s CEO, Peter Kern, openly questioned Agoda’s discounting practices and characterized Agoda as “one of the worst when it comes to this sort of rate abuse.”  Historically, Agoda has acknowledged and even embraced these practices (in the name of the consumer) making clear that it will do everything it can to source any available discounted rates – including via wholesalers, whose practices, Agoda maintains, could always be better managed by their supplier partners.
    
    
  • Hotel Distribution Trends to Watch.  We’ve included in this week’s Update a recent report from IHG’s Andrea Daniels summarizing the recent thoughts and predictions of HSMAI’s Global Distribution Advisory Board regarding the future of hotel distribution. 
    
    
  • Add Hilton to the List of Hoteliers Targeted in Texas for Their Resort Fee Practices.  Just weeks ago, we detailed Texas Attorney General, Ken Paxton’s newest resort fee disclosure claims against Hyatt (following quickly on the heels of his announced settlement with Marriott).  Now, we can add Hilton to the list of hoteliers targeted by the Attorney General.  Many questioned whether the Attorney General’s own political and legal troubles (including a possible impeachment) might slow his solitary campaign, but, at least for now, those troubles do not appear to have any real effect on his approach to resort fees. 

For those of you in the United States, I hope you enjoyed your long holiday weekend – the unofficial kickoff to summer. Our weekly Online Travel Update is below.  It’s been a few weeks since we featured a story on banks’ growing influence in travel, but this week’s Update includes stories on two large banks – Australia’s CommBank and JP Morgan Chase.  Highlights include:

• • Booking’s Plan Purchase of Etraveli Runs into Regulatory Objections.  For some time now, we have been following Booking’s planned purchase of flight-booking platform, Etraveli.  This past April, the European Commission announced that it was re-commencing its review of the planning acquisition after several months of delay.  This week, sources familiar with the investigation reported that the Commission was poised to issue a statement of objections to both companies detailing the Commissions’ anti-trust concerns.  While such a statement may not kill the planned purchase, it may require the companies to offer compromises to the identified concerns. 
    
    
  • JP Morgan Chase Details Growing Travel Platform.  JP Morgan Chase shared an update on its travel platform, ChaseTravel.com, this past week at an investor day.  According to Chase, total sales volume on the platform totaled $8 billion in 2022 and it expects that number to increase to $10 billion this year.  The number of travelers who purchased travel through the platform increased 40% year over year.  Travel is a critical component of Chase’s lifestyle business, which also includes shopping and dining. 
    
    
  • Hopper Announces Partnership with Australia’s Largest Bank.  CommBank, Australia’s largest bank, announced this past week that it was partnering with Hopper (via Hopper’s B2B platform, Hoppercloud) to exclusively power the bank’s new travel features, offering users of its mobile application the opportunity to search and book hotel, air and rental cars.  As part of the partnership, Hopper will offer CommBank users price predictability, integration with CommBank’s loyalty awards program (earn and redeem) and the usual mix of fintech products and services. 

As evidenced by our list of stories, it was a relatively quiet week in online travel.  The Texas Attorney General’s Office and its pursuit of hotel companies over their resort fee practices garnered most of the industry’s headlines (exactly as the Texas AG wanted). Some highlights from this week:

• • Following Its Settlement with Marriott, Texas AG Targets Hyatt.  With a settlement in hand with Marriott, the Texas Attorney General is now targeting other national hotel brands and operators with claims that their rate and resort fee practices violate Texas consumer protection laws.  In announcing the settlement, Texas Attorney General Ken Paxton stated, “Marriott is now taking proactive steps to promote price transparency.  In contrast, other major hotel  chains have defended their deceptive practices, and they will be facing the full force of the law for their actions.”  Apparently, Hyatt is next on the Texas AG’s list as the AG’s office filed suit on Monday against Hyatt. 
    
    
  • Fact or Fiction:  Instant Booking for Meetings and Events.  For some time now, we’ve been working with clients to move their sales and contracting practices for small meetings and events to online platforms (both proprietary and third party) with the promise that small meetings and events can be booked instantly.  But do these tools really work?  Is that what meeting planners and groups really want?  Or do the many nuances of a successful meeting or event (as compared to a rooms only leisure booking) make them too difficult to book entirely online?  This past week, Skift, offered its perspective on these instant booking platforms. 

For those of you attending the upcoming week of events in Toronto (HSMAI’s Commercial Strategy Week), I would enjoy connecting.  I’ll be presenting on Monday at the Executive Roundtables and facilitating that afternoon the discussion at the Chief Distribution Officer roundtable.  I hope to see you there!

Welcome to our weekly Online Travel Update. Expedia’s many announcements at its Explore 23: Connect conference this past week garnered most of the industry headlines, while Uber moved closer to becoming a full online travel booking platform. Recent news highlights include:

• • CWT Partners with Booking.com’s Booking for Business.  Want to participate in Booking.com’s corporate booking platform, Booking.com for Business?  You may have no choice now.  CWT and Booking.com announced last week a new partnership under which CWT will provide the corporate booking platform discounted (and perhaps, loyalty program) rates and inventory for its suppliers’ hotels, flights and rental cars.
    
    
  • Uber to Offer Flights to UK Users.  Users of Uber’s transportation booking application in the UK will soon be able to search and book flights.  Powered by Hopper, the new functionality will include Hopper’s signature fintech products, including Prize Freeze and Cancel for Any Reason.  Uber plans to roll out the new offering across the UK this summer with no announced plans to introduce the offering outside the UK.
    
    
  • Expedia Announces Several New B2B Initiatives.  At Expedia’s Expedia 23:Connect conference held this past week in Seattle,  Expedia announced several new B2B initiatives, including a new partnership with Mastercard that allows issuers of the cards to allow users to redeem credit card loyalty program points for travel products and services offered through Expedia.  Other announcements at the event include the launch of Expedia’s travel operating system (Travel OS), whose first commercial “micro-service” will help users protect against fraud, the launch of Expedia’s guest experience score, the launch of new rate management capabilities for those suppliers using Expedia’s optimized distribution (OD) platform and the launch of new capabilities for travel agencies using Expedia’s Travel Agent Affiliate Program (TAAP).  For those of you wanting a more intimate view of last week’s Connect event, we’ve included a story about the event from Seattle’s own technology newsletter, Geekwire.

Our weekly Online Travel Update for the week ending Friday, May 5, 2023, is below. We hope you enjoy:

• • Airbnb Releases Summer Update.  Airbnb garnered much of the industry’s attention this past week with a series of announcements related to its release of its latest (summer) update.  The update includes a number of important changes to the platform and the booking experience, including (i) a renewed focus on individual (cheaper) private rooms (“Airbnb Rooms”) with each listing featuring additional information about the room’s host, (ii) the addition of new, streamlined check-out instructions that are displayed prior to booking, (iii) “transparent” pricing (more on that later), (iv) discounted rates for longer lengths of stay or direct debit payments and (v) improved customer support.  In a likely effort to address growing calls for regulation limiting the use of mandatory fees (i.e., cleaning fees), Airbnb’s release includes pricing toggles that allow users to view the total price (rate plus mandatory fees, excluding taxes).  As many of us know, these types of toggles are used today by several major lodging operators and thus far have not satisfied regulators’ call for pricing transparency.
    
    
  • EU Gatekeeper Process to Begin.  For those of you who read our earlier stories about the EU Digital Markets Act (DMA), you’ll likely recall the significance of the DMA’s “gatekeeper” designation.  Under the DMA, gatekeepers, which are large online platforms whose size allows them to act as private rule makers, will be prohibited from engaging in certain behavior.  Of particular interest to our readers is whether Booking.com will receive the designation.  If it does receive the designation, Booking.com, among other things, will be prohibited from requiring any form (narrow or broad) of rate or availability parity from its suppliers throughout the EU.  Potential gatekeepers have until July 3 to provide required details about their core services to the EU Commission.  The Commission then has until September 6 to decide whether the company satisfies the gatekeeper requirements.  Designated gatekeepers will have 6 months to comply with the DMA’s requirements.
    
    
  • American Airlines Seeks to Shut Down Use of Re-shopping Technology.  Over the years we’ve included a number of stories detailing re-shopping services – automated services that continuously monitor previously booked fares and rates and then automatically cancels and re-books flights and accommodations when the fares or rates drop.  American Airlines has apparently had enough with these services.  Last week, the airline announced that advisors that use the services after June 1 will be subject to debit memos or have access to certain American Airlines content cutoff.  Additional penalties might also include suspension or termination of advisors’ authority to sell the airlines’ fares.  Terms and conditions of the policy were distributed to advisors via an addendum to the advisors’ agency agreement and added to customers’ contracts of carriage (which applies to all customers). 
  • Resort Fees and Other Mandatory Charges.  Changes are coming.  With Marriott’s rollout of display changes later this month, expect the change by Marriott (which many view as the gold standard on issues such as these) to be followed by noticeable changes by other industry suppliers in their display of rates.  What about OTAs, you ask?  Perhaps changes by Marriott and other industry members might finally force aspiring attorneys general and regulators to take a hard look at OTAs.  Maybe.  Let’s hope.