Potential Price Reduction for Hotels on Booking.com: Impending Legal Action Brings Uncertainty - Hotel bookings service Booking.com initiates lawsuits, causing speculation about potential decreases in hotel prices.
In a significant development for the European hotel industry, over 10,000 hotels from 25 countries have banded together in a class action lawsuit against Booking.com. The legal action challenges the online travel giant's former "best price" or "parity" clauses, which prohibited hotels from offering lower room rates on their own websites or other booking platforms compared to Booking.com [1][2][3][4].
The lawsuit, linked to a 2024 European Court ruling that these clauses violated EU competition laws, is expected to impact hotel prices by potentially enabling hotels to offer more competitive and lower prices directly to consumers. This could foster more direct bookings and more price competition overall.
Specifically, the removal of the parity clause and the ongoing lawsuit could lead to increased pricing flexibility for hotels, potential downward pressure on hotel prices, and reduced commission dependency on Booking.com. Hotels are now free to undercut the prices offered by Booking.com, and direct booking with a hotel can save the commission paid to travel portals [1][2][3][4].
The legal action is seeking compensation for losses from 2004 to 2024 and stems from concerns that the parity clauses restricted competition and inflated prices artificially by enforcing uniform pricing across platforms. The case is underway in the Netherlands.
Founded by Dutch internet pioneer Geert-Jan Bruinsma in 1996, Booking.com has grown significantly over the years. Today, it employs around 24,000 people worldwide and generates over 20 billion euros in annual revenue. In 2005, the portal was purchased by the US company Booking Holdings for 133 million euros [1][2][3][4].
In Germany, approximately 70% of hotel bookings are made via online portals, with Booking.com holding the largest market share. However, this year, hotel prices have fallen on average, according to comparison portal Check24. This price drop may not necessarily lead to significant reductions in hotel prices for all cases, but it could signal a shift towards a more competitive pricing environment in the future hotel booking market.
Expedia and HRS are two other major online portals that divide the remaining market share. Alexandros Vassilikos, president of the European hotel association Hotrec, stated that European hoteliers have suffered under unfair conditions and excessive costs due to abusive practices in the digital market [1][2][3][4].
The class action lawsuit for damages is open for hoteliers to join until August 29. The Federal Cartel Office ruled in 2021 that Booking.com's "best price" clause was anti-competitive. Booking.com charges a standard commission of 12% in Germany, with a higher rate of 15% for rooms in Berlin.
It is important to note that the removal of the parity clause does not guarantee lower prices for all hotel bookings. Consumers are encouraged to compare prices across platforms to find the best deals. The price-conscious behavior of consumers may also contribute to the observed price drop.
Founder Bruinsma left the company a year after the acquisition. Today, Booking.com is part of a larger group that includes Momondo, Cheapflights, and OpenTable. The ongoing developments in this case will undoubtedly shape the future of the European hotel booking industry.
[1] The Guardian [2] Reuters [3] BBC News [4] CNBC
- As a result of the class action lawsuit against Booking.com, hotels may offer more competitive prices, potentially leading to increased savings for consumers. This could be indicative of a shift towards a more affordable lifestyle for travelers.
- The ongoing legal action is rooted in concerns about financial fairness in the hotel industry, as it challenges practices that restricted competition and artificially inflated prices, affecting both hoteliers and consumers.
