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The UK’s Office of Fair Trading has made the hotel industry a bit more competitive, but the new rules have their limits. Booking.com and Expedia aren’t permitted to advertise discounted rooms to the general public, but will only do so for members of their loyalty programs and other closed groups. Still, it puts hotels at a disadvantage.
After giving preliminary approval in August, the UK’s Office of Fair Trading finalized a plan that enables Booking.com and Expedia to offer members of their closed groups, such as loyalty programs, room rates that are lower than InterContinental Hotels’ lowest published rates.
The pact injects competition into the UK hotel market, and European travelers seeking room accommodations in the UK are expected to benefit from the agreement.
The agreement does not impact U.S. or other non-European travelers — unless it leads to similar agreements in those geographies in the future.
Although the pact basically applies to the two online travel agencies and the hotel chain, which are among the larger travel companies in Europe, other hotels and OTAs in the UK are expected to enter into similar agreements if they want to remain competitive.
Booking.com and Expedia would fund these room rate discounts out of their commissions or margins from the hotels.
In reaching an agreement with the UK’s competition watchdog, Booking.com, Expedia and InterContinental Hotels avoided penalties or sanctions based on allegedly anticompetitive practices.
To get the discounts, travelers would have to join an OTA loyalty program, and initially make a room booking at a published rate before being eligible for future discounted rooms.