GLOBAL REPORT—Several prominent hotel chains in the United Kingdom are scrambling to resolve an alleged breach of regulations for not including VAT in initial prices shown for some properties online.
The charges were first brought to light when U.K.’s Advertising Standards Authority—an independent organization recognized by the government, the courts and other regulators such as the Office of Fair Trading as the body to deal with complaints about advertising—filed adjudication on InterContinental Hotels Group and its Crowne Plaza brand. The ASA argued VAT-exclusive prices on various property websites were misleading and breached ASA code.
The ASA code states that VAT, or the value-added tax, must be displayed if purchasers are required to pay it.
“Because we understood that IHG's websites were likely to be viewed by consumers who must pay VAT, we concluded that it was misleading and a breach of the Code to display prices which were VAT-exclusive,” the adjudication states.
IHG did not respond to request for comment by press time, although the ASA reported IHG will “carefully liaise and consult with the owners and/or operators of those franchised IHG-branded hotels that were displaying VAT-exclusive prices, which could take some time. They added that there were also technical challenges due to the different types of property management systems and software used by IHG branded hotels.”
Because only a small portion of IHG-branded properties are either owned or managed by the group, the company only has the ability to set rates for a small portion of the overall portfolio in the U.K.
Additional parties implicated
A subsequent survey by “Which? Travel” magazine found that the following 11 hotel chains in the U.K. did not include VAT in the total price until the payment page in the booking process: Crowne Plaza, Doubletree by Hilton, Guoman, Hilton, Holiday Inn, Malmaison, Marriott, Mercure, Radisson Blu, Sofitel and Thistle.
The Committee on Advertising Practice, which is administered by the ASA and is responsible for the codes of practice, has started a compliance action which goes into effect 17 September to force the entire U.K. hotel industry to adhere to the code. But doing so could prove problematic, sources said.
One initial concern is the cost and resources required to make the technical changes to hotel websites, many of which are run not by hotel companies themselves, but, as in the case with IHG, various owners and third-party managers.
A broader concern involves inconsistent advertising practices across Europe. Displaying VAT-inclusive prices could put U.K. hoteliers at a competitive disadvantage by encouraging would-be holidaymakers to book in seemingly more affordable destinations, sources said.
Still, the ASA is moving forward with its compliance action. Although specific details are confidential, according to ASA spokeswoman Sarah Gaskell, several implicated hotel companies are making known their attempts to adhere to the code.
“We are committed to offering transparent pricing,” said Thomas Dubaere, managing director of U.K. and Ireland for Accor, via email. “The majority of our 185 hotels, including all our Mercure hotels, display VAT-inclusive prices throughout the entire booking process. There are currently four hotels that show VAT on the second page, and by September 17 the VAT-inclusive prices will be displayed throughout the entire booking process.”
All Marriott International-branded hotels in the U.K. will publish pricing and rate information to include Vat as part of advertised pricing by 17 September, the company said in a statement.
Hilton Worldwide replied with a statement as well, saying the company is “fully committed to adhering to all relevant local laws and customs in which it operates.” The hotel group is in the process of making necessary changes to its websites.
In the short term, Hilton is “redirecting the relevant pages of our U.K. hosted website and placing a banner on relevant online booking pages within our U.S.-hosted (website) hilton.com, highlighting that quoted prices are exclusive of taxes.”
While all hotel rates Guoman and Thistle Hotels featured in any advertising (both online and offline) are shown inclusive of VAT, parent company Guoman Hotel Management (UK) Limited, has yet to do the same for its rates displayed in the booking process on its website.
“Addressing this issue does present significant technical challenges, however we are working on our systems to resolve this,” the company said in a statement.
Malmaison declined comment. The Carlson Rezidor Hotel Group, which operates the Radisson Blu brand, did not reply to request for comment by press time.
