Hong Kong watchdog’s probe triggers pledge from Booking.com, Expedia.com and Trip.com to drop contract clauses deemed a threat to competition
- Competition Commission says terms the companies agreed with accommodation providers may deprive customers of lower room rates
- In a first for Hong Kong, the online travel agency giants’ promise to make amends will go to public consultation
Three major online travel agencies have offered to remove clauses in their contracts with accommodation providers that a Hong Kong watchdog investigation found could threaten competition and lead to higher prices for guests.
The Competition Commission said that Booking.com, Expedia.com and Trip.com had agreed favourable terms with businesses such as hotels that might undermine the online travel agency market, hinder new or smaller firms from entering and deprive consumers of choice.
“The existing clauses require accommodation providers in Hong Kong to always give the online travel agents the same or better terms as those they offer in all other sales channels,” the antitrust watchdog said in a statement, referring to clauses on room price, availability and conditions.
It said the terms made it unlikely that hotels or guest houses would offer a better room price, conditions or availability to a new online travel agency because they would then have to offer superior deals to the agencies already under contract with them.
“In turn, this may have the potential effect of reducing the incentive of online travel agents to offer lower commission rates in the first place,” it said.
“As a consequence, buyers of accommodation services, such as hotel guests, possibly may not benefit from lower and more varied room rates.”
In response to the commission’s investigation, the three travel giants proposed taking out the relevant terms in their existing and future contracts with accommodation providers.
