OFT investigates online hotel room sales

by William ASTON on September 17, 2010

After a complaint from website Skoosh.com, the Office of Fair Trading has launched an investigation into online hotel room bookings.

According to the OFT, the investigation is still in its early stages, however, it has received information that allegedly price fixing has become an issue in the online sale of accommodation. It has been reported that the investigation was launched after it received information from discount website, Skoosh.com that they had been put under pressure to offer the standard price for rooms.

According to Skoosh, the firm was openly discounting rooms and receiving threatening calls and emails from hotels. According to Skoosh’s Dorian Harris, the website was told it had to raise prices or simply remove the hotels from their lists.

Online hotel room sales have become a growing business in the travel sector. Mainly dominated by the hotel chains themselves, there are also sites, however, that have taken to selling rooms on a commission.

The OFT said it will be looking into alleged breaches in competition law, but that its investigations are still in the early stages. It has been reported that the majority of the investigation will centre on suspected price fixing and existing agreements between firms. Mr Harris said that the news of the investigation was exciting because it would force the industry to examine what it is doing.

He added that often consumers are being misled or confused, and that the industry has become accustomed to using rate-parity. Online booking sites are given a specific number of rooms per night to sell to third parties and then receive a commission from the hotel for doing so. If it is found by OFT that any breaches have been made to the Competition Act, then the governing body can fine firms up to 10 per cent of their turnover.

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