22 October 2008

Legal expert warns hotels and operators could be breaking competition laws

Tour operators and hoteliers could be falling foul of competition laws, according to legal experts.

The issue will be the subject of discussions at next monthââ¬â¢s European Tour Operators Association (ETOA) annual conference at the Copthorne Tara Hotel in Kensington.

At the November 6 conference, Neil Baylis, an expert in European competition law from the law firm K&L Gates, will explain what is and what is not lawful.

ââ¬ÅâœThe most serious infringements relate to pricing,ââ¬~ he explained.

ââ¬ÅâœIn my professional experience many companies donââ¬â¢t appreciate what constitutes price fixing neither do they realise the extent of the law and the full consequences of transgressing.ââ¬~

With increasing levels of sales being made through hotelsââ¬â¢ own websites and as much as 40% of rooms are now sold directly, he will explore whether it is lawful for hotels to ask an operator not to publish a rate lower than their own.

Baylis will tell delegates whether such an agreement constitutes price fixing and, if so, what are the penalties.

ETOA executive director Tom Jenkins said: ââ¬ÅâœThe implications of these questions are profound. The answers could affect the way the hotel industry organises itself and the freedom intermediaries have to sell hotel accommodation at a discount.

ââ¬ÅâœWhat I think many people fail to grasp is that, when the law is broken, both the hotel and the tour operator are deemed guilty.ââ¬~

Penalties for anti competitive practices can be so stringent - up to 10% of the offenderââ¬â¢s global turnover - that they could jeopardise the viability of the business.


By Bev Fearis

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• Keep rates flexible
  
  

  Totally in agreement with John's comment. It is in the customer's and the industry's best interest that distribution channels have price as one of their variables in the marketing mix. Darron Raw www.swazi.travel

  By Darron Raw, Wednesday, October 29, 2008
• Rate fixing will destroy the hotel industry
  
  

  I am so glad this issue has been brought up, as it is happening in our region(albeit usually found in first time hoteliers with stand alone properties). We are a On Line Booking agency that refuses to sign up any accommodation provider that dictates the rate at which we should be selling their rooms. It is the beginning of the end for travellers as they will eventually not have any choice. Distributors that represent hotels at the hotels prescribed rate are destroying free trade and not doing themselves any good in the long run, as they are effectively doing themselves out of a job, because eventually the hotel will no longer need them. I am fully supportive of moves to curb this practice. John Nicholls www.vanuatu-hotels.vu

  By john nicholls, Wednesday, October 22, 2008