Hotels across Europe
are being encouraged to join a class
action against Booking.com to reclaim potentially billions of euros in overpaid commissions.
The action is being
launched in the Netherlands, where Booking.com
has its head office, and is being co-ordinated through a Dutch foundation
called the Stichting Hotel Claim Alliance. It is being pursued by a pan-European team of
lawyers and economists with experience in the field of competition damage
claims, including Volker Soyez, a partner in Brussels-based legal firm Schneider
Geiwitz & Partner (SGP).
The action is being
launched following a judgement by the European Court of Justice (ECJ)
in September 2024 in the a long-running case between Booking.com and 63 individual
German hotels and groups, including 25hours,
Dorint and Climb.
The case revolves
around the legality of so-called parity clauses in the agreements between the online
travel agency (OTA) and hoteliers.
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When Booking.com
entered the German market in 2006, it included what is known as a “wide parity”
clause in its terms and conditions for hoteliers, which prohibited them from offering
rates lower than those offered on Booking.com through their own sales channels
or other OTAs.
In a 2013 case
involving HRSGermany’s Federal Cartel
Office ruled that wide parity clauses were contrary to German and European
Union laws on cartels. In 2015, Booking.com replaced the wide parity clause with
a “narrow parity” clause, which prohibited hotels from offering lower rates on
their own channels. The Federal Cartel Office subsequently ruled this was also against
German and EU competition law.
The latest class action is beingsupported by the European hospitality association Hotrecwhich alleged that the ECJ “found that the platform’s parity clauses breached EU competition law.”
“European hoteliers have long endured unfair conditions and inflated costs. Now is the time to stand together and seek redress. This collective action sends a strong message:Abusive practices in the digital marketplace will not go unchallenged,”Hotrec president Alexandros Vassilikos said in a release.
In an email to PhocusWire, a Booking.com spokesperson called Hotrec’s statements “incorrect and misleading.”
“The ECJ judgement did not conclude that Booking.com’s price parity clauses were anti-competitive or that they influenced competition (and this can be clearly seen in paragraph 92 oftheir ruling). So, this ruling does not open the door to damage claims, and we will continue to show that parity clauses do not have an anti-competitive effect in court if needed,” the spokesperson said.
Taking action
SGP’s Soyez said the September 2024 judgement brought the situation into sharper focus.
“When the ECJ rendered its judgment, people across our hotel, across Europe became aware that this is not just a German issue but something that affects all hotels in Europe,” Soyez said.
He added that hoteliers were keen to do something but feared retaliation if they went on their own.
“There are larger hotels chains [that] would have been willing to fund this case on their own, but the smaller hotels do not have funds for that. After having talked to a large number of hotels of different sizes, the decision was [made] to have a funder in place who would cover all the costs and cost risks,” said Soyez.
Soyez said the total
sum involved in the action could amount to billions of euros in overpaid
commission.
“It depends on the
number of hotels that participate, but in the German case, we have approximately
2,000 hotels participating and the claims value is €750 million, without interest,”
he said.
Hotels and groups
wanting to participate in the action have until July 31 to join the claim. They
will need the details of how they are incorporated and the invoices they have
received from Booking.com.
And the action is not
just limited to hotels in the EU.
“Hotels from the
European Economic Area, including Iceland, Norway and Lichtenstein, but also
the United Kingdom and Switzerland are welcome to join,” said Soyez.
The company made
revenues of $23.7 billion in 2024, an increase of 29.3% from 2023.
In its Q4 2024
financial statement, Booking.com said, “The company is involved in
investigations related to whether Booking.com’s contractual parity arrangements
with accommodation providers are anticompetitive because they require partners
to provide Booking.com with rates, conditions and availability at least as
favorable as those offered to other [OTAs] or by the partner itself.”
“To resolve certain
of the parity-related investigations, the company has from time to time made
commitments regarding future business practices or activities, such as agreeing
to narrow the scope of its parity clauses. Some of these investigations have
resulted in fines and the company could incur additional fines and/or be
restricted in certain of its business practices in the future.”
Old news?
Pedro Colaço, CEO of
GuestCentricsaid this case feels like a “blast from the past.”
“If you go back 20
years, people were complaining that they thought that these behaviors were
truly anti-competitive,” he said.
“Hotels have moved
on from this,” said Colaço. “They said OK, I need to focus on a healthy
distribution mix. I need to make sure that I have good direct strategy, a good
tech stack, I need to make sure that my pricing is correct, that I can leverage
the new Google tools and so on.”
“This could be
millions in damages or just millions in distractions, which looks, in my
opinion, more likely,” he said.
The question is how
Booking.com will react to the action and whether it will aim to claw back any
negotiated damages.
Colaço said, “Booking.com
is going to come up with listing fees and promotion fees and all sorts of
stuff, and it’s going to be even more opaque. The big guys have people that run
spreadsheets and know exactly what they’re spending. The small guys don’t, and they
are just going to think that Booking.com is very inexpensive and lean even more
into the big OTAs and nothing will have been achieved.”
Soyez said, “Booking
is in a difficult situation. It is a market dominant company with 70% market
share, so whatever they do is very closely scrutinized by the regulators.”
Soyez does not
expect for the action to extend to other OTAs in the market, such as Expedia.
“The situation is
different,” he said. “Expedia has a market share of between 10 and 15%, which, from a competition law perspective, makes a decisive difference, and that’s why
we are not looking into expanding this case to other portals.”
Max Starkov,
hospitality technologist and digital strategist, said the dominance of
Booking.com in Europe is hoteliers’ own doing.
“These
lawsuits are like suing the restaurant where you had a nice meal for charging
you high prices,” he said.
“Instead of
fixing [their] own direct distribution channel and investing in technology,
marketing and talent, hoteliers have been embracing the lazy man’s distribution
game—via the OTAs. And now they are complaining that OTA distribution is too
expensive? Hoteliers knew the cost of OTA distribution the moment they signed
up with the OTAs.”
Starkov
believes European hoteliers—60% of which are independent—are averse to
technology.
“They do not
invest adequately, if at all, in technology, marketing and talent: Less than
10% of them have a CRM [customer relationship management system] and some kind
of guest reward program in place, and less than 15% have revenue management systems
in place. Websites? Last updated before the pandemic. SEO—how do you spell
that? AIO [artificial intelligence optimization]—you are kidding, right?”
He added, “No
wonder Booking.com has gained such dominance in Europe.”
