Duff on Hospitality Law

Booking Holdings’ recent earnings release garnered much of the industry’s attention this past week for a variety of reasons, including legal. It will be interesting to watch how important changes to the legal landscape affect the company’s primary booking platform and its many supplier partners.

• • Trip.com Enjoys Strong Fourth Quarter and Year. Trip.com reported stellar fourth quarter and full year (2023) results this past week.  Highlights include (i) full year net revenue of $6 billion (122% growth YOY), (ii) full year accommodation booking revenue of $2.4 billion (133% growth YOY) and (iii) total full year sales and marketing expenses of $1.3 billion.  By segment, annual revenues broke down as follows:  39% accommodations, 41% transportation, 7% packages and 5% corporate travel.
  • Legal Updates Featured Prominently in Recent Booking Holdings’ Earning Release. This past week’s fourth quarter and full year earnings release from Booking Holdings featured two important legal updates.  First, Booking announced that in the fourth quarter the Spanish National Markets and Competition Commission had levied an “unprecedented” $530 million dollar fine against Booking.com in a draft opinion.  The fine stems from Booking.com’s infringement of Spanish competition law.  According to Booking.com’s CFO, David Goulden, the Company plans to appeal the decision if it becomes final (which could take years to resolve) but in the near term, the Company will have to make changes to some business practices in Spain.  Second, and perhaps more significantly, Booking reiterated its plans to notify EU regulators early this year of its “gatekeeper” status under the EU’s Digital Markets Act (DMA) (which our readers know effectively means the end of existing contractual parity provisions in the EU).  These two important legal updates are in addition to a ruling by a Netherlands’ appeals court finding that Booking.com is indeed a travel agency (and no longer a technology company now that it collects and processes payment) and that as a result its employees must be enrolled in an industry-wide pension fund. 
  • Still Think That AI Will Solve Everything? Air Canada Might Think Otherwise. A recent small claims court ruling provides an important reminder (and salient advice) to anyone thinking about using an AI powered chatbot.  The case stems from allegedly incorrect advice given by Air Canada’s website’s chatbot over the airline’s bereavement policy.  In response to a traveler’s claims that it had received incorrect advice from the chatbot, the airline sought to defend the claims by arguing that it could not be held liable for the chatbot’s incorrect advice (somehow the chatbot was a separate legal entity responsible for its own advice).  What?  The judge disagreed with the airline’s position and found the airline responsible for not taking reasonable care to ensure that the chatbot’s advice was correct.