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Booking.com's biggest controversies over the years

Booking.com has had its fair share of controversies over the years, with the most recent one being the State of Texas V Booking.com CEO Glenn Fogle lawsuit on alleged deceptive practices used on booking.com

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By Eglė

Published: Sep 01, 2023 min read

Booking.com's biggest controversies over the years

"For years, Booking has duped unsuspecting Texans who shop for room rates on its various websites by omitting mandatory fees from the advertised room rate," Texas said in the lawsuit. That practice "thwarts comparison shopping and, consequently, allows Booking to lure unwitting consumers with artificially low room prices," the state alleged."

-Bloomberg

Read up on booking.com's shady business strategies and how to avoid them here. (updated 2023)

So, in the spirit of this new legal controversy happening for booking.com, here's an overview of the biggest controversies booking.com had to go through.

2023
Booking.com Owner Sued by Texas on Alleged Deceptive Practices

  1. Defendant & Allegations: Booking Holdings Inc., the parent company of Booking.com, has been sued by the state of Texas for purported deceptive trade practices related to the advertisement of hotel room prices.
  2. Core Issue: Texas alleges that Booking.com intentionally omits mandatory fees from the prices it showcases, leading to consumers perceiving a lower rate than the actual cost. Consequently, the platform might appear more appealing to potential guests than competitors.
  3. Portfolio of Brands: Booking Holdings Inc. operates multiple brands, including Priceline, Kayak, Agoda, Rentalcars, and Opentable, in addition to Booking.com.
  4. Specific Example: The lawsuit highlighted an instance where a hotel room in San Antonio was listed on Booking.com for $409. However, when proceeding to reserve, the rate surged to over $546, accounting for a mandatory $56 fee by the hotel and $81 in taxes.
  5. Financial Implication: The state alleges that Booking.com benefits financially from this practice as it allegedly retains a percentage from the total charged on mandatory fees.
  6. Business Model: Most of Booking Holdings Inc.'s revenue is generated from commissions obtained through facilitating accommodation bookings on Booking.com.
  7. Past Issues: Between 2017 and 2019, Booking.com and its main competitor, Expedia Group, had faced scrutiny from UK and EU watchdogs regarding potential misleading practices in advertising. To address these complaints, Booking.com had agreed to alter their method of presenting prices and offers on their websites across the EU.
  8. Lawsuit Details: The case is titled Texas v. Booking Holdings and is filed in the Bexar County District Court (166th District).
    This is still ongoing…

2022

Booking.com Faces Antitrust Investigation in Spain

  • Background: Booking.com is under investigation by Spain's competition watchdog, the Comisión Nacional de Los Mercados y La Competencia (CNMC), over potential anti-competitive behavior.
  • Reason: The probe was triggered after complaints from the Spanish Association of Hotel Managers and the Regional Hotel Association of Madrid. They allege Booking.com may be abusing its dominant position by imposing unfair terms on Spanish hotels and potentially excluding other online travel agencies.
  • Focus: The CNMC will assess if Booking.com's practices exploit the economic dependency of hotels in Spain and disrupt free competition, thereby constituting "unfair competition acts."
  • Legal Grounds: CNMC stated there's evidence suggesting Booking.com may have violated the Spanish Competition Act and the Treaty on the Functioning of the European Union.
  • Company Statement: Booking.com emphasized its commitment to cooperating with CNMC and highlighted its role in supporting the travel ecosystem, especially amidst the uncertainties caused by the global economic situation.
  • Timeline: The CNMC has 18 months for its investigation. The initiation of formal proceedings does not indicate any prejudgment.
  • Broader Context: Booking.com's significant market power in the European travel sector has raised concerns among EU lawmakers. The company might face further regulation under the upcoming Digital Markets Act (DMA) in the EU, which targets dominant tech platforms. However, the DMA's implementation may take time, allowing national investigations like CNMC's to address immediate concerns.
    This is still ongoing…

2020
Booking.com loses to Amsterdam-based hotel Wikingerhof for abusing its position in the market

What Happened? The EU's high court decided that Booking.com, an Amsterdam-based company, would have to face a lawsuit in Germany brought against it by the hotel Wikingerhof.

Background:

  • Wikingerhof began its collaboration with Booking.com in 2009, offering its 65 rooms on the reservation platform.
  • In 2015, Booking.com altered its terms and conditions. The hotel expressed concerns but felt compelled to accept them, believing Booking.com's dominance in the online booking market left them with little choice.
  • Consequently, Wikingerhof took legal action in Germany, accusing Booking.com of exploiting its market dominance by pushing the hotel into unfair practices.

The Twist:

  • Booking.com contested, stating that German courts had no authority to decide on this matter. According to their agreement with Wikingerhof, disputes were to be settled in Dutch courts.
  • The German high court then consulted the European Court of Justice on this jurisdictional conflict.

EU Court's Decision:

  • The crux of the case was if Booking.com had abused its dominant position under German competition laws.
  • The European Court of Justice sided with Wikingerhof, stating the dispute wasn't purely contractual (which would've placed it in the Netherlands) but also involved "tort, delict or quasi-delict" which falls under German law.

Why This Matters:

  • This verdict aligns with previous rulings, like when the Court of Justice allowed Austria's consumer rights group VKI to sue Volkswagen in Austria regarding the dieselgate emissions scandal.
  • Booking.com holds a mammoth share of the European online hotel reservation market with 67.7% of all online hotel bookings, whereas its closest competitor, American Expedia, has only 12.8%.

Booking.com expressed disappointment in the ruling, fearing potential challenges to contractual freedoms.

Russia Accuses Booking.com of Anti-monopoly Law Violation

Key Highlights:

  1. Accusation: Russia's federal anti-monopoly service (FAS) has charged hotel reservation platform Booking.com with infringing the nation's anti-monopoly laws.
  2. Background: This move by the FAS comes approximately a year after initiating a probe into Booking.com. The primary concern was the company's requirement for hotels and hostels to maintain consistent prices across their personal websites, rival booking sites, and Booking.com.
  3. Statement from FAS: The regulatory body commented on Booking.com's alleged misuse of its dominant market position.
  4. Potential Penalty: If found guilty under Russian anti-monopoly laws, Booking.com could be liable to pay a fine ranging between 1% and 15% of its yearly revenue earned in Russia.
  5. Booking.com's Response: The reservation platform expressed disappointment over FAS's decision. Nevertheless, Booking.com expressed its commitment to sustain support for its Russian partners and to ensure the demand for essential recovery services in the hospitality sector.

Result: Russia Fines Booking.com $17.5M For Breaking Antitrust Laws


2019

Hotel booking sites to make major changes after CMA probe(booking.com included)

  • The Competition and Markets Authority (CMA) targeted prominent online hotel booking platforms over concerns related to misleading sales strategies.
  • Sites investigated included Expedia, Booking.com, Agoda, Hotels.com, ebookers, and Trivago.

Major Concerns:

  1. Pressure Selling: The tendency to create a misleading sense of urgency or room popularity. For instance, misleading customers by saying others are looking at the same hotel, without clarifying they may be checking for different dates.
  2. Misleading Discount Claims: Promoting discounts that are not genuinely available. For instance, comparing higher weekend rates with weekday ones or contrasting luxury suite prices with standard rooms.
  3. Hidden Charges: Not displaying the entire cost upfront, which could include taxes, booking, or resort fees.
  4. Search Results: Not being transparent about how hotels are ranked after a search. There was concern over hotels being prioritized based on commission rather than relevance to the search.

Commitments by Booking Sites:

  • Clarify how search results are ranked.
  • Avoid giving false impressions of room availability or misleading customers into quick decisions.
  • Be transparent about discounts.
  • Display all compulsory charges in the headline price.

CMA's Stance:

  • CMA Chairman, Andrew Tyrie, emphasized that misleading tactics and hidden fees in the online hotel booking sector are entirely unacceptable.
  • While six major websites have committed to refraining from these practices, the CMA urges the entire sector to adhere to these standards.

Next Steps:

  • The CMA will oversee the compliance of the changes made by these platforms. These modifications should be implemented no later than 1 September.
  • The Authority will also communicate with other hotel booking entities, defining clear expectations in line with consumer protection laws. They will be expected to make the requisite changes by the same September deadline.
  • Further enforcement action might be taken if other entities are found violating consumer protection laws.

Legislative Context:

  • The investigation was aligned with the Consumer Protection from Unfair Trading Regulations 2008, which guards against unfair, misleading, or aggressive commercial practices.

2015

Triptease extension V Booking.com 

Background:

  • Booking.com sent a strongly-worded letter to its hotel partners concerning the use of TripTease’s Price Check widget.
  • The Price Check widget by TripTease, currently active on 8,000 brand websites, showcases the rates from three OTAs alongside the hotel’s own rate on its website, potentially increasing direct conversions by 35%.
  • Booking.com's stance is clear: they warn of potential legal action if the hotels breach their contracts by displaying inaccurate rates, and they mandated the removal of Booking.com's brand and rates from TripTease’s widget.
  • This situation brings forth questions about the transparency of online travel agencies (OTAs) and the potential power plays they might use in the evolving digital landscape.

Analysis:

  1. Power Dynamics: The tension emphasizes Booking.com’s significant market presence and influence. As the world's largest online travel agency, its decisions and communications can significantly sway the market and have direct implications on other businesses like TripTease.
  2. Transparency and Fair Play: Digital platforms offer consumers a wider array of choices, but they also put businesses in the spotlight. When a dominant player makes a move perceived as aggressive, it forces the industry and consumers to question the authenticity and transparency of their actions.
  3. Breach of Contract: The legal concerns raised by Booking.com are central to the issue. If TripTease’s widget displays accurate and contractually allowed rates, then hotels should have the autonomy to use it without fear of repercussions. However, if there are discrepancies or contract breaches, Booking.com's concerns may be warranted.
  4. Hotelier's Dilemma: While many hotels might appreciate TripTease's tool as it potentially drives more direct bookings, the looming threat of legal consequences from a dominant OTA like Booking.com makes the situation precarious. Hotels, especially smaller chains or individual properties, might be reluctant to take a public stand due to the potential fallout.
  5. OTAs vs Direct Booking Tools: The tussle isn’t just between Booking.com and TripTease. Many well-established hotel booking engines are developing their technologies to bypass OTAs, reflecting a larger trend of hotels wanting more direct control over their bookings and customer relationships.

It's good to see people fighting against booking.com's disreputable and shady practices, but the fact is they are still employing immoral business practices - hidden fees, users overpaying without even knowing it (location-based pricing, device-based pricing). 

Recently, we reviewed booking.com and whether you should use booking.com for booking a hotel in 2023. You can read our verdict here.

best travel tool for saving money on hotels - ratepunk

Sep 01, 2023

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