Holiday Inn owner to give sites leeway to cut rates

THE owner of the Crowne Plaza and Holiday Inn brands is to give online travel agencies and Expedia more leeway to cut room rates as part of efforts to convince regulators that it isn’t limiting competition.
Holiday Inn's owner is to give sites more leeway to cut room rates. Picture: ContributedHoliday Inn's owner is to give sites more leeway to cut room rates. Picture: Contributed
Holiday Inn's owner is to give sites more leeway to cut room rates. Picture: Contributed

The Office of Fair Trading (OFT) last year accused InterContinental Hotels Group (IHG) – which also owns the Candlewood and Hotel Indigo brands – of effectively setting a minimum price for its rooms.

The watchdog claimed that IHG had convinced the websites to agree not to use cuts in their own commission to reduce the prices they offered.

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The case is viewed as a test for the whole sector and was in response to a complaint from another website, Skoosh, which claimed that a number of hotel chains were preventing it from offering such discounted prices on room-only accommodation.

IHG and the two websites yesterday presented a compromise agreement, which the OFT has now put out for consultation.

The deal effectively allows the agencies again to choose to undercut the hotel group, but only for certain types of customers – those on loyalty schemes or who have made at least one previous booking with the agent.

That will allow IHG, the world’s largest hotel group, to retain more influence at least over the headline price offered to first-time consumers.

Senior director Ann Pope said: “The OFT is consulting on whether these commitments offer an immediate and effective means of injecting some meaningful price competition into the online offering of room-only hotel accommodation bookings where, in our provisional view, none may exist.

“Under the proposed commitments, online travel agents would be able to offer discounts off hotel room bookings to qualifying consumers.

“The OFT would now like to hear the views of all interested parties before it makes its decision on whether to accept the commitments.”

The watchdog said it had limited the scope of its investigation to a small number of major companies, with a view to achieving a swift and effective outcome.

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The OFT added: “However, the investigation is likely to have wider implications as the alleged practices are potentially widespread in distribution arrangements in the industry.”

The hotel group said: “IHG notes this morning’s announcement from the OFT regarding its investigation into the online supply of room-only hotel accommodation by online travel agents.

“The OFT has today commenced a public consultation on a series of commitments designed to bring an end to this investigation without finding of infringement or the imposition of any fine.

“IHG has worked closely with the OFT to agree these commitments, which are now subject to a consultation period ending 13 September.”

Shares in IHG dipped 19p or about 1 per cent to close at 1,959p, valuing the hotel giant at about £5.3 billion.