tripadvisor paris
1020 days ago
 

Expedia hit with major fine in France over misleading marketing

Expedia has been hit by a Paris court order to pay a Euro 367,000 ($484,000) fine for “misleading marketing practices”.

The fine will go to the Synhorcat group, a long-time thorn in the side of Expedia. A further Euro 70,000 will be heading in the direction of two hoteliers who joined the action.

The ruling comes after the French national union of hoteliers, Synhorcat, and the two hotels, complained about Expedia and subsidiaries TripAdvisor and Hotels.com.

The action was later supported by the government and its Directorate General for Competition, Consumption and Repression of Fraud (DGCCRF), an intervention seen by some as unprecedented in France.

The alleged practices included:

  • Using Tripadvisor reviews to redirect traffic to Expedia and Hotels.com and not a hotel’s website.
  • Displaying a hotel as “full on requested dates”, when in fact rooms were available, and suggesting other nearby available properties having better commercial terms with Expedia.
  • Incorrectly displaying hotel phone numbers so users could not call a hotel directly.
  • Announcing special promotional rates when the final price was actually just a standard rate.
Claims regarding the redirecting of users from TripAdvisor sites to Expedia-owned booking sites were not upheld in the ruling.

The French press, inevitably, is all over the place about the “ethical victory” of “consumers and hotel industry” against ecommerce intermediaries.

While there is no doubt the courts have done their job into investigating , the ruling could open a serious debate about the degree of freedom for online intermediaries into selling travel inventory.

  • As far an agent has negotiated and agreed net rates with the property, are they not free to set their own pricing?
  • If the agency has negotiated and filled room allocations with a property, are they not free to sell whatever other inventory they have available?
  • Should one OTA be forced to promote a property just because they are selling a nearby one?

One thing is sure, with Expedia hit for displaying misleading promotions, there must be many more nervous people at daily deal and private sales sites today.

NB: In an emailed statement, an Expedia official says:

“We have been working with the French General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) over recent months to clarify the commercial practices of our reservation websites and TripAdvisor.fr, in accordance with applicable standards and as part of our ongoing policy to improve our tools and services.

“The ruling acknowledges our efforts to ensure the information contained on its websites is as simple, accessible and comprehensible as possible and also that significant efforts have been made beyond our legal obligations to add further information regarding both phone numbers and their conditions and hotel availability displayed on FR.hotels.com and Expedia.fr.

“TripAdvisor has also duly made changes to the wording on tripadvisor.fr on pages where prices or availability are shown in cooperation with the investigation. We are pleased to hear that this ruling acknowledges that these changes make it clear to visitors to the TripAdvisor.fr site that price and availability information is coming from our booking partners.

“As part of our ongoing efforts to improve the experience for our customers, we have also made significant investments: we have set up an advanced training program for employees in the call-centres for our reservation sites; strengthened our service by the gathering and sharing of consumer opinions via call centres and through user testing in our user experience lab which has enables us to significantly and constantly improve the user-friendliness and design of our reservation websites, with simpler and more practical searches.”

 
 
Daniele Beccari

About the Writer :: Daniele Beccari

Daniele Beccari is a contributing Node to Tnooz and co-founder/CEO of TargetHub, a startup using mobile and data to change the way people travel.

A travel technology strategist focusing on product innovation with global industry players, he also served as VP Europe at Isango, a global travel experiences aggregator. Previously he was head of global product marketing at the e-commerce division of Amadeus.

He started his career with the internet appliances R&D division of HP, working on e-mail client devices, web tablets and internet refrigerators... in 1995!

An MBA graduate from INSEAD (France), Daniele can be found somewhere between Paris, London, Turin, San francisco or Tokyo. Daniele's views are his alone and not necessarily the views of his clients.

 

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  1. Cathy

    I have a small hotel in Morocco. We’ve seen our margins eaten up as reservation sites dominate the market and create false confidence with our guests. Agoda.com, with whom we don’t have a contract, advertises our rooms at double the price and slashes it to our actual rate. Any advice??? Congrats on the victory against Expedia.

     
  2. Alla Dolce Vita

    Caro Daniele,
    …gli specchi sono moooolto scivolosi!

    Dear Mr Daniele,
    mirrors are veeery slippery!

    EXPEDIA owns TRIPADVISOR ….this is the problem…probably one of the more relevant.

    …then TRIPADVISOR sells “on line ” reputation, to pilot bookings….and this is why Expedia has been fined!

    Your questions are legitimate when the operator is working fairly….this IS NOT the EXPEDIA case!
    …dont’ you think?

     
  3. Rusty McNeal

    As far an agent has negotiated and agreed net rates with the property, are they not free to set their own pricing?
    You must be clear that it is your promotional rate if it is not a promotion directly from the hotel. As an operator it is best to negotiate your own exclusive promotions with the hotel. Be sure you own your product. Expedia may not appear to look like the Yellow Pages when they are actually more like a Sears Catalog.

    If the agency has negotiated and filled room allocations with a property, are they not free to sell whatever other inventory they have available?
    Absolutely, the operator has this right. But, Expedia displays hotels that are not available just on their site. It is best for the operator to just remove the display when the hotel allotment is full. Only show your availability. A hotel used to 3rd party vendors should have this in their price agreement.

    Although I agree Expedia may have been in the wrong. It is also wrong for the courts to force a fine. In most cases, Expedia should have price agreements with an exit clause versus display contracts. If the agreements are not met than either party has the right to walk away; like Holiday Inn walked away from Expedia in the early 2000′s.

     
  4. Pramesh Kumar

    Great stuff. I feel Expedia arent the only ones doing it. I feel from the other side lots of hotels are also advertising rates that really are not as good as some OTA. Taking into account the OTA generally say the cheapest rates however if you dig a little deeper you will find Agoda have booking fees as well. So not only is the percentage been made from the customer but also the tradeoff of the hotels paying them.

     
    • Marie

      Pramesh,a little truth for us travelers, I learned from a friend in the hoetl industry that an ‘OTA’ CANNOT and DOES NOT offer rates lower than an actual hotel because they have to be in equal, meaning rates must be the same to each site, UNLESs you are buying a bndle/package, like airline + hotel or car rental. however, when you book with an ‘OTA’, it limits your ability to modify/change or cancel a reservation and you are actually paying the same price, but the hotel has to pay a nasty commission to the site the reservation came from. You also cannot earn loyalty points if you liek to earn points for choosing a certain hotel chain. So I jsut book direct with the hotel I want ,after researching of course.

       
      • Rusty McNeal

        If you compare single room night rates, apples to apples; you have more flexibility booking directly with the hotels. But, the hotels can’t have their cake and eat it too.

        For those that can accept the more strict rules of the OTA product, they can take advantage of more creative promotions. Such as; car packages, 4th or 5th night free, adjoining room 50% off for families, free breakfast with a minimum night package, ski pass packages etc.

        Leisure travelers and bootstrapping businesses may find bargains through the OTA’s. However, frequent travelers staying one night should be on a hotel loyalty program.

         
 
 

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