The U.K.’s Office of Fair Trading on Tuesday issued preliminary results of its investigation into price fixing by hotels and online-travel agents, saying in a Statement of Objections that Booking.com, Expedia and InterContinental Hotels Group have infringed competition law.
The Statement of Objections alleges that Booking.com and Expedia each entered into separate arrangements with IHG that restricted the OTAs’ ability to discount the price of room-only hotel accommodation. The OFT said the infringements “are, by their nature, anti-competitive in that they could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers.”
Dorian Harris, founder of startup OTA Skoosh.com, raised the issue to the OFT after he claims Skoosh was being prevented by various hotel chains from offering discounted room rates. A formal investigation by the OFT was launched in September 2010.
Harris told HotelNewsNow.com on Tuesday that he considers the preliminary results a win.
“It’s very rare that the Office of Fair Trading backtracks after they issue a statement of objections … it normally continues on with an official ruling,” he said. “The ‘best rate guarantees’ are a very strong proposition, and I suspect (hotel brands and OTAs) will have to stop doing that. Hotel companies like Skoosh will be free to discount again, opening up the market.”
Booking.com, Expedia and IHG will have opportunities to respond to the provisional findings before the OFT decides whether competition law has in fact been infringed.
The future is bright for global business travel despite uncertainty in some world regions, and hoteliers are looking to leverage that optimism—and strong demand—in the upcoming round of rate negotiations, according to the first installment of HotelNewsNow.com’s Special Report on corporate travel.
“With the lack of new supply and less new business hotels being built, the existing hotels are going to do better next year,” said Jan Freitag, senior VP of global development at STR, parent company of HotelNewsNow.com.
While the Hendersonville, Tennessee-based research company is projecting occupancy to increase only 0.7% during 2013, demand gains will be more pronounced in upper-tier properties in downtown locations, which traditionally cater to business travelers, he added.
Read “Corporate travel outlook positive for hotels.”
With Spain sinking deeper into a recession, the European Union bailing out the banks to the tune of $120 billion and the country facing the prospect of a full financial bailout, the Spanish economy and the country’s hotel sector certainly have seen better days, writes HotelNewsNow.com correspondent Benjamin Jones.
Chain executives, analysts and operators say the country’s sovereign debt crisis has impacted the industry’s access to credit, deeply affecting the market, while at least one major chain is planning to shutter less profitable domestic properties.
At the same time, cash-strapped Spaniards are curtailing vacation plans for the vital summer season as the revenue-starved government raises the sales tax on hotel rooms.
India's Sahara Group has agreed to buy a controlling stake in New York's landmark Plaza Hotel for $570 million, according to a report in Reuters.
The 105-year-old luxury hotel overlooking New York's Central Park is jointly owned by Elad Properties, an Israeli-owned real-estate company, and Saudi-based Kingdom Holdings Co 4280.SE.
Elad, controlled by Israeli businessman Yitzhak Tshuva, said it would receive 1.6 billion shekels ($400 million) for its 60% stake, while Kingdom will receive the rest.
Abu Dhabi’s real-estate sector is becoming more competitive and moving further in favor of tenants and occupiers, as a large number of high quality projects are delivered across all sectors, reports Jones Lang LaSalle.
And despite the record increases in visitor arrivals, the significant current and upcoming supply of hotel rooms continues to exert downward pressure on average daily rates. However, the recently announced government initiatives to boost leisure demand will help market conditions in the longer term.
Approximately 6,700 additional rooms are expected to enter the market by the end of 2014, which reflects a reduction in the previous pipeline planned for the city. Several projects have been delayed given the current market conditions. Overall supply is expected to reach about 21,400 rooms by 2014, representing a compound annual growth rate of 13.3%.
Compiled by Jason Q. Freed and Stephanie Wharton.