We have followed over the last years Europe grappling with the issue of most favoured nation clauses and hotel booking. Our last update regarded a joint monitoring project between the CMA and the European Commission, designed to monitor hotel prices and commission rates, following a series of interventions by the regulators: http://eu-competitionlaw.com/regulatory-scrutiny-of-online-hotel-booking-continues/

On 6 April 2017, the European Commission declared that it had ended this stage of the monitoring and published its results. The Commission (and the 10 national competition authorities which helped co-ordinate the data for the report) found that broadly speaking, there was a lot of apathy from hotels in comparing commission rates for online travel agents (“OTA’s”) and that price was not the dominant factor in using an OTA. In fact the Commission found that visibility and how high the hotel appeared in rankings was more of a priority for hotels than commission rates.

With regard to room prices, the report found more positive news following the Commission’s actions. Here the headline change was that the switch from wide to narrow parity clauses by Booking.com and Expedia led to an increase in room price differentiation between OTA’s by hotels, in eight of the ten participating Member States.

For now, the Commission has decided to keep the sector under review, to better assess the effect of their measures over the longer term. To coincide with this announcement by the EU Commission, the UK Competition and Markets Authority announced that it would no longer assess the UK hotel booking market for competition law breaches as a matter of administrative priority, but would continue to assist the wider EU review.

Hotel booking and hotel pricing are complex sectors with likely many sub-markets within them. For instance, it is hard to imagine pricey and exclusive central city hotels being subject to the same market considerations as 3 star beach-side holiday resorts. The former would likely be filled with corporate customers and others for whom price would not be a significant factor in purchase, the latter could be extremely price sensitive and more dependent on amenities such as being all-inclusive or the state of the swimming pool. It is perhaps not surprising that the Commission’s recent interventions have not led to an all-out race to the bottom on pricing, both for room rates and OTA commission rates.

The full report from the EU can be found here: http://ec.europa.eu/competition/ecn/hotel_monitoring_report_en.pdf