David Weston says a fine imposed on Compare the Market strengthens the case for a ban on rate parity clauses imposed by OTAs on hotels

Competition watchdog the CMA fined Compare the Market (home of the TV meerkats) £17.9 million in November. What offence had Sergei and his friends committed? Don’t those meerkats simply compare prices for us? Well, no. ‘Price comparison’ sites are not passive aids to finding the best price. They are active players in their marketplaces, taking a cut of every transaction, directing people to

suppliers that pay commission. The CMA found that between

December 2015 and December 2017 those meerkats had been imposing ‘rate parity’ clauses on suppliers they listed, preventing suppliers from offering a lower price on rival sites. This breached competition law and

was “likely to have resulted in higher insurance premiums”. Why is this relevant to travel and tourism? Because roughly half of all hotel bookings are made through online travel agents, which dominate search results for accommodation and travel. OTAs are

price-comparison sites for hotels and B&Bs, and routinely

impose rate parity clauses. An article in The

Spectator last January argued that “the giant vampire squids of travel [the two giant OTAs] are beginning to suck the life out of the small fry they claim to help”. It went on: “You might imagine a struggling hotel or B&B could offer their own lower rates to tempt customers. Nope. In both the UK and US, can insist on rate parity clauses that mean hotels are not allowed to discount their own prices to their own customers on their own websites.” The CMA fine hinged on ‘wide

MFNs’ (‘most favoured nation’ clauses), which OTAs used in the past to stop hotels and B&Bs giving lower prices to other OTAs, but which they were forced to stop. The Spectator article was about the

continuing use of another type of rate parity clause that OTAs still use to

stop hotels giving lower prices to their own customers. The Bed & Breakfast Association

filed five formal complaints about OTA practices with the CMA in 2017. The watchdog took action on misleading marketing and fake discounts, but two calls we made are still unaddressed: for the CMA to ban rate parity clauses and to ban ‘brandjacking’ by OTAs (bidding on hotel names without permission). Given the scale of the problem – the billions overpaid by customers and the billions unfairly extracted from small businesses by giant platforms – this issue gets very little media coverage. But consumers need protection in our sector too.

David Weston is chairman of the Bed & Breakfast Association

‘Cruise needs timeline for restart’ Ian Taylor

Cruise leaders called for a timeline for resuming operations after the government’s Global Travel Taskforce reported “now is not the time” to restart cruising last week, but the report set a framework for restarting and noted the pressure to resume by next spring. The taskforce, led by the

secretaries of state for transport and health, recommended “a gradual phasing in of operations, starting with UK cruises [and] transitioning to European ports of call before a full resumption of sailings”. It proposed a phased restart could

begin “when the national alert level is at level 3 and a move to level 2 is being considered by the chief medical officer”, and noted: “The sector requires a lead time of eight to 12 weeks to prepare.” The report acknowledged the If the sector is

‘unable to secure bookings’ during peak selling season, ‘next year will be written off’

cruise sector’s peak booking season “is between Christmas and February” and concern that if the sector is “unable to secure bookings” during this season, “business for next year will be written off”. It also noted a “restart of seagoing

cruises since August” in Germany, Italy, Greece, Malta, Cyprus, Croatia, France, Norway, Madeira and some Caribbean islands, and that cruises are due to restart in the Canary Islands and Singapore. The report said a restart will

depend on cruise operators taking responsibility for “the management and implementation of repatriation

of passengers and seafarers”. An annex to the report sets out

three phases: Phase 1:Cruises start and end in the UK. They may operate in European waters but will call only at UK ports. Passengers restricted to UK residents. Phase 2: Cruises start and end in the UK, but calls at European ports allowed in line with Foreign Office advice and the travel corridors list. Phase 3: Normal operations resume. There will be a monthly review of

progress, with agreement required at each stage between the Department for Transport, the Maritime & Coastguard Agency, Public Health England, the Foreign Office and the devolved administrations. “There will be the ability to roll back if required.” However, the report states: “We

must proceed cautiously and if public health advice does not support restart or moving between the stages, we will follow this advice.”

3 DECEMBER 2020 39

The taskforce sets out three phases for cruising’s restart

PICTURES: Shutterstock; Mel Maclaine

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