In the context of online booking, the term “gatekeeper” refers to a figure or entity that controls access to resources or information, significantly influencing the market. Booking.com, a leading online travel booking platform, was recently declared a gatekeeper by the European Commission under the DMA (Digital Markets Act) because of its dominant position and practices regulating hotels’ access to customers. Its contract terms, rate management, and visibility of accommodations are just some of the factors that led to this definition. These regulations aim to reduce the influence of Booking.com to promote greater equity in the market.
What Booking.com Must Do to Adapt
In the coming months, to comply with the new regulations, Booking.com will have to take several key actions such as:
- Remove or Modify Rate Parity Clauses.: In many countries, authorities have banned the use of rate parity clauses, which force hotels to offer the same rates on Booking.com as on other sales channels. Booking.com will have to remove or modify these clauses to comply with the new regulations.
- Ensuring Greater Transparency: The platform should make the criteria for ranking accommodations and the use of customer reviews clearer. This involves providing detailed information on how rankings are determined and ensuring that reviews are authentic and representative.
- Making Cancellation Policies Clearer.: Cancellation conditions should be made explicit in a transparent manner, avoiding unclear or misleading clauses that could disadvantage customers.
- Working with Regulatory Authorities.: Booking.com must work closely with authorities to make sure it complies with all new regulations and help create a fairer online booking market.
Benefits for Hotels
The new regulations could bring several benefits to hotels. The conditional is a must because we are certain that Booking will try hard to defend its algorithm and the primacy it has earned over the years. The road outlined should lead to:
- Greater Freedom of Pricing: Without the restrictions of rate parity clauses, hotels will be able to offer different prices on various sales channels, including their own website. This will allow them to be more competitive and directly attract customers with exclusive offers without being penalized by the Booking algorithm
- Reducing Dependence: Hotels will be able to diversify their sales channels, reducing dependence on platforms such as Booking.com. Investing in direct marketing and improving their websites can help hotels build a loyal customer base without having to pay high fees.
- More Favorable Contract Terms.: With stricter regulations, hotels will have greater negotiating leverage with booking platforms, resulting in fairer and more flexible contract terms.
Benefits for Travelers
Travelers will also benefit from the new regulations:
- Improved Access to Offers.: With greater pricing freedom for hotels, travelers will have access to a wider range of offers and discounts, being able to choose the most convenient option that suits their needs.
- Greater Transparency: Clearer and more transparent information on hotel rankings and reviews will enable travelers to make more informed and confident choices.
- Clearer Cancellation Policies: More transparent cancellation terms will avoid unwelcome surprises, allowing travelers to plan their trips with greater peace of mind.
The DMA’s new regulations aim to reduce the influence of Booking.com as a gatekeeper in the online booking market, creating a fairer and more competitive environment. These changes will provide significant benefits both for hotels, which will be able to operate with greater freedom and flexibility, and for travelers, who will benefit from greater transparency, better deals, and an improved overall experience.
We do not believe that in the short term this will bring obvious benefits to hotels and travelers, but it is certainly the first step in limiting the overpowering influence of Booking.com over accommodations, which, once they enter the grip of Big B, can hardly get out unscathed.
