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 Holiday Inn owner InterContinental Hotels Group 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.
British-based InterContinental Hotels Group and US-owned Booking.com insisted that they had done nothing wrong and indicated they would challenge the findings.
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.
Publishing a media statement on its interim findings today, 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 regulator said the alleged infringements could limit price competition between online travel agents and make it harder for new online travel agents to win business by offering cut-price deals.
Clive Maxwell, the OFT’s chief executive, said: "We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers."
Mark Datta, managing director of a mobile-only hotel booking service, Blink Booking, was not surprised by the findings. He said: “We’ve long believed that the big online travel agents have been guilty of denying consumers the best prices – and that hotels’ hands are tied by price parity agreements.
“The online travel market may appear to offer plenty of choice and competition, but the reality is that there are lots of different shop windows selling the same rooms at the same prices – with those prices agreed through parity deals between the big groups and the big online travel agents.”
The companies named by the OFT are among the biggest players in Britain’s £10 billion-a-year hotel industry.
Booking.com, which is owned by the US group Priceline.com, claims to be the number one online hotel reservation service in the world, offering more than 210,000 hotels in 41 languages.
InterContinental Hotels Group (IHG), a publicly-quoted company based in Denham, Buckinghamshire, is by number of rooms - 660,000 - the largest hotel operator in the world.
Owning 4,500 hotels in nearly 100 countries, its nine brands include some of the best known names in the travel business including InterContinental, Crowne Plaza, and Holiday Inn.
IHG and Booking.com said they would contest the OFT’s “provisional findings.”
IHG said its arrangements with online booking agents were “compliant with competition laws and consistent with the long-standing approach of the global hotel industry.”
Priceline.com, which also operates a US website under the Priceline.com banner, said it would contest the allegations “vigorously.”
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.