IHG, Expedia & Booking.com Ruling To End Price Fixing

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The UK OFT (Office of Fair Trading) has been investigating IHG, Expedia and Booking.com since 2010 alleging them of price fixing. Now, the parties have signed legally binding agreement to end the practice.

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Booking.com and Expedia has agreed to something called “price parity” meaning that they would not undercut IHG’s own pricing of hotels.

You can read more about the OFT ruling on BBC’s website here or on Daily Mail’s website here.

Now, under the OFT agreement the agents can discount the rooms, but can require you to have purchased a full priced room previously or to be member of agents loyalty program.

This really defies the purpose of discounting in the first place and the ability to compare the prices. You cannot know the discounted price of a hotel unless you have signed up for the agent’s loyalty program or purchased from them previously.

Hotels rarely have the absolute lowest prices available for the consumers on their websites, as they often dump inventory through third parties and consolidators.

Hotels usually want you to believe that the lowest prices are always on their own websites, so that they wouldn’t need to pay 10% to 25% commissions (could be higher) to the likes of Expedia and others.

Conclusion

My personal belief is that this binding agreement that the three companies signed with the OFT is rather toothless. OFT should have required for the agents to be able to discount as they wish by lowering the commissions they make from hotel bookings.

Haven’t you noticed that IHG has now instituted discounts for IHG Rewards Club member weekend bookings in some regions to the tune of 10%? Hyatt has also introduced a discount scheme for Gold Passport Platinum and Diamond members.

OTA’s have discounted rooms for a long time by offering coupons that don’t lower the advertised “headline” price, so that they would be in compliance with the price parity agreements they have. I expect OTA’s such as Expedia and Orbitz to have more discount programs available for their loyalty program members in he future.

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