Two leading online travel companies and the world's biggest hotel chain have been accused by a regulator of conspiring to fix hotel prices at the expense of British customers.
A two-year investigation by the Office of Fair Trading provisionally found that the British-based InterContinental Hotels Group, owner of Holiday Inn and Crowne Plaza, had colluded with Booking.com and Expedia to limit discounts to the public.
The regulator warned that the arrangements could be widespread in the travel industry, signalling the possibility of investigations into other travel companies.
A complaint from a small online travel agent that it was being prevented by large hotel chains from offering discounts for room-only accommodation triggered the investigation in September 2010.
The OFT said that Booking.com and Expedia had entered into separate agreements with IHG which appeared to breach the 1998 Competition Act.
Expedia allegedly violated rules over a three-year period, between October 2007 and September 2010, the OFT said, adding that the arrangement between Booking.com and IHG was continuing.
The companies named by the OFT are among the biggest players in Britain's £10bn-a-year hotel industry.
Both British-based InterContinental Hotels Group and US-owned Booking.com insisted they had done nothing wrong and indicated they would challenge the provisional findings.
Expedia said: "Expedia remains committed to ensuring that it provides consumers with the widest possible choice of travel options at competitive prices and will seek to safeguard its ability to continue to do so in relation to the current regulatory process."
The companies will have an opportunity to respond formally to the OFT's findings before the watchdog concludes definitively whether competition law has been broken.
Mark Datta, managing director of Blink Booking, said: "The online travel market may appear to offer plenty of competition, but in reality lots of different shop windows sell the same rooms at the same prices."
Online websites claim to offer bargains galore for hotel rooms but i's experience suggests travellers are better off booking direct.
We searched five websites yesterday for the rate for a single room at the five-star London Park Lane on Saturday 1 December.
InterContinental Hotels Group, which owns the hotel and is at the centre of the OFT investigation, offered the equal cheapest deal, an 'advanced saver rate' of £210.
The same rate (though in US dollars - $330) was also on offer at Priceline.com, which owns one of the companies criticised by the OFT – Booking.com. The rate at Booking.com itself was £252. The rate offered by Expedia.co.uk, the other company criticised by the OFT, was also £252.