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Published on Friday, April 22, 2016

House of Lords report calls for urgent OTA investigation

A House of Lords report is demanding an urgent investigation into anti-competitive practices in the online travel sector.

The report by a House of Lords Select Committee says the sector lacks accountability and transparency and should be scrutinised by competition authorities.

Its recommendations were welcomed by the British Hospitality Association which helped provide evidence and opinion on the issues being investigated.

The BHA is urging the government to impose an outright ban on rate parity clauses which stop hotels offering lower rates than those on the online booking sites where they are listed.

"This practice impacts directly on consumers since it means less competitive pricing with similar room rates offered by online travel agencies and hospitality venues across the board," said the BHA.

It said rate parity clauses are already illegal in France and were found to be anti-competitive in cases brought against and HRS in Germany.

In its evidence to the Committee, it said the market is now dominated by a few major players.

"Priceline has now acquired and others and represents over half the online market for our industry, and Expedia has a considerable share of the remaining half of the sector," it said.

"Our dependence on the online giants is considerable, especially given the fact that they have the command to be able to buy a lot of advertising space from Google and to occupy many of the first entries several times."

BHA chief executive Ufi Ibrahim added: "These OTAs wield vast power and hold our industry hostage by commanding punitive rates of commission.

"We are pleased that this influential committee is proposing Europe wide steps to enable our industry to challenge anti-competitive online practices when they arise."

The report, Online Platforms and the Digital Single Market, was published this week in response to an EU Commission consultation on how the largest online platforms use their market power.

Among the accusations against OTAs is the claim that some are ripping off customers by using computer history data, via web cookies, to charge them more for holidays.

Once they see a customer has repeatedly visited a site or viewed a particular holiday or hotel, they allegedly bump up prices.

The report is calling for a traffic light-style system where firms are rated green, amber, or red according to how much they should be trusted.

It also called for consumer protection laws to force websites to fully disclose how they rank and present search results, publish ratings and reviews, and how and when they use personal data to determine prices.

Stuart Fuller, director of commercial operations at NetNames, the online brand protection company, said the report highlights 'a serious issue that has been occurring for some time'.

"The House of Lords committee has recommended the implementation of a traffic light-style system to help consumers identify trusted websites, but travel agents and holiday websites must do more to help protect their customers," he said.

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