U.S. Circuit Court Deals a Blow to Short-Term Platforms
("Airbnb Loses Major Fight Over California City's Rental Law," Bloomberg Quint - Stories, March 13, 2019)
In somewhat of a surprise ruling issued last week, the U.S. Ninth Circuit Court of Appeals refused to strike down a Santa Monica city ordinance holding short-term rental platforms (Airbnb and Homeaway) legally liable for vacation rentals violating the City’s short-term rental ordinance. In reaching its decision, the Court rejected arguments by the platforms that the ordinance violated both the US Communications Decency Act of 1996 (which shields online services from liability for the content posted by third-party users on their websites) and the platforms’ constitutionally protected rights of free speech. The Ninth Circuit Court’s decision is consistent with other lower court decisions in Los Angeles and San Francisco, but runs counter to a separate Los Angeles lower court decision. While a decision by the Ninth Circuit obviously provides stronger precedential value for courts considering similar local laws and regulations in the future, it remains to be seen whether cities seeking to curb the growth of short-term rentals will seek to leverage this decision to more aggressively pursue the platforms facilitating the bookings as opposed to the hosts themselves. We’ve attached a complete copy of the Court’s decision for those of you interested.
This week’s Update includes a heavy dose of TripAdvisor updates. Once the dust settles a bit on this past week’s big news – the announced acquisition of Hotel Tonight by Airbnb – we’ll update everyone on the acquisition and its anticipated effects. Is it a game changer? I don’t think so. Does the acquisition expedite the inevitable standardization of products and services across all the major online travel distribution platforms, definitely. In the meantime, enjoy this week’s Update everyone.
Sales Principles Introduced for Online Booking Sites in the UK
("Hotel Booking Sites Get Consumer-law Compliance Principles from CMA," MLex, March 1, 2019) (subscription required)
By September 1, 2019, hotel booking sites operating in the UK must implement mandatory “sales principles” released last week by the UK Competition and Markets Authority (CMA). The release of principles follows the CMA’s months-long investigation into the sales practices of certain online booking sites and the sites’ recent agreement to improve transparency on the sites to avoid further regulatory scrutiny. The principles, which apply not only to OTAs and search engines, but also to hoteliers’ own booking sites, cover sort order, reference prices (e.g., “discount” or strikethrough pricing), hidden charges and pressure selling. According to the CMA, sites that fail to implement the principles by the September 1, 2019 date may be subject to further enforcement action.
On February 19, Bisnow hosted its 2019 Pacific Northwest Hotel Summit held at the Four Seasons Hotel in Seattle. Reputed real estate property developers, hotelier and principal consultant of an architectural and design services firm convened to share their insights on how Seattle’s booming tourism is impacting the hotel industry, specifically with regard to the increase in development, investment, supply, and branding of hotel properties.
This week’s Update includes a report on the EU Commission’s widespread examination of online platforms’ pricing practices and an update on the much-publicized standoff between United and Expedia. Enjoy.
Online Platforms Lack Price Transparency
("Most online shops lack price transparency, EU Commission," MLex, February 22, 2019)
Following the latest annual “sweep” of online platforms conducted by the EU Commission and members of the EU’s Consumer Protection Network (CPN), the EU Commission issued a press release last week previewing their findings (a full report will available shortly). According the press release, nearly 60% of the 560 websites reviewed by the Commission and CPN members demonstrated irregular compliance with EU rules, largely around pricing and discounting. Examples of the “irregularities” included (i) inauthentic or false discounting claims, (ii) inadequate disclosures of mandatory fees or other charges added to the final price and (iii) inadequate information about a consumer’s right to terminate a transaction. Although this latest sweep did not focus specifically on online travel platforms (online travel was the focus of a 2016 sweep), the findings and potential enforcement efforts resulting from this latest sweep are sure to affect a broad variety of e-commerce platforms, including travel.
At the 2019 HEDNA Global Distribution Conference held on January 30 in Los Angeles, I moderated a panel discussion with key industry figures in hotel revenue management who discussed and offered their take on a number of hot topics trending today in the hospitality distribution landscape, including rogue wholesalers and its impact on the hotel industry; static and dynamic rates and its upsides and downsides; segment of Chinese inbound travelers; loyalty in distribution and its impact on direct booking; and the rise of voice-activated devices in hotel rooms.
The panelists also reflected on the state of the industry, sharing major developments in 2018 and what to watch for in 2019.
Watch the full video of the panel discussion.
If you have any questions, feel free to contact me at firstname.lastname@example.org or at 206.816.1470.
Moderator and panelists include (from left to right): Greg Duff, Firm Chair and Principal of Garvey Schubert Barer; Calvin Anderson, Head of Commercial of OYO Rooms; Andrew Rubinacci, SVP, Revenue & Distribution of Omni Hotels & Resorts; and Monica Xuereb, Chief Revenue Officer of Loews Hotels & Resorts.
We begin this week’s Update with some good news on the direct booking front. Enjoy.
Hilton’s Direct Booking Efforts Enjoying Success
("Hilton maintains focus on direct relationships as growth outstrips agency channel," Phocuswright, February 15, 2019)
As part of its fourth quarter (2018) earnings call last week, Hilton shared some good news on the results of its ongoing direct booking efforts. According to Hilton CEO, Chris Nassetta, bookings on Hilton’s direct web channels grew this past year at a rate three times the rate achieved by third party online booking channels. According to Nassetta, Hilton’s direct channels (both offline and online) now represent approximately 75% of Hilton’s total business (approximately one half coming through web channels). Naysayers might ask at what cost are these improvements being achieved, particularly given Hilton’s heavy focus on loyalty program growth, which has been core part to Hilton’s direct booking efforts. Whether these many investments by Hilton (and Hilton owners) to establish longer-term (loyal) relationships with guests will pay long term dividends (which are sustainable through the next inevitable economic downturn) remains to be seen.
Expedia Gets Tough
('Expedia sues United in fight over ticket-distribution costs," Seattle Times - Business, February 6, 2019)
Although several sources reported late Friday that Expedia and United have agreed to temporarily suspend their court battle, Expedia’s willingness to pursue claims against United in the midst of contract negotiations is nonetheless interesting and, perhaps even, telling. Is the lawsuit a sign that Expedia is growing tired generally of travel suppliers’ threats to not renew (or even terminate) critical supplier agreements in efforts to obtain better contract terms? Or is the lawsuit simply a last ditch effort to ensure that a critical supplier continues to make good on its clear and unambiguous contractual commitment to provide the online booking platform critical travel products? Here’s what we know . . . According to the heavily redacted complaint (see attached) filed in the Federal District Court for the Southern District of New York, Expedia is seeking a declaration that United’s threatened withholding of flight data is a breach of the parties’ long-standing contract, an injunction prohibiting United from following through on its threatened action and damages in an amount to be proven at trial. The dispute centers around United’s plan to withhold flight information beginning in October, which Expedia alleges (and United apparently acknowledges) is the result of Expedia’s refusal last August to renegotiate key terms and conditions of the parties’ supplier agreement. According to Expedia, United has no contractual basis to withhold the information and by carrying through with the threat would harm thousands of Expedia customers. Whether the current stay remains in effect or the parties’ elect to re-engage in their New York jousting, we will continue to keep you updated.
The week’s Update features an update on one of the many pending EU and EU member states’ ongoing investigations into the practices of OTAs. Enjoy.
Danish Competition Authorities Weigh In
("Hotel-booking competition improving but users must be better-informed, Danish report says," MLex, February 1, 2019) (subscription required)
In a report released last week by the Danish competition authority, the regulator concluded that although competition among bookings channels has improved (allegedly as a result of the rate parity improvements associated with “narrow parity”), much education is still needed. According to the regulator, both consumers and smaller hotel companies need a far better understanding of OTAs’ revised terms and conditions and their effects. Going forward, the regulator will now focus on better educating hotel companies of the revised terms and conditions and informing consumers of OTAs’ standard sales practices (e.g., limited room availability). Separately, the Danish government has committed to working with the EU to require OTAs to better inform consumers of the OTAs’ preferential sort order and display practices.
This week’s Update features a heavy dose of Airbnb as it celebrates a milestone. Enjoy.
Lufthansa Partners with AI-Powered Predictive Platform
("Lufthansa invests alongside Hopper, plotting collaboration on artificial intelligence-led tools," Phocuswright, January 23, 2019)
The Canadian company, Hopper, has the been the subject of several previous Updates. The application-based booking platform, which uses predictive analytics to forecast airfares and room rates, announced last week a “multi-million dollar” partnership with European airline, Lufthansa. According to the two new partners, the benefits of the newly announced partnership include giving Lufthansa access to Hopper’s AI to identify traveler preferences and predict demand and providing Hopper a much needed entrance to the European market.
Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.