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At the end of May, we gave you an inside look at the inner-workings of hotel booking sites, specifically rate-parity laws that dictate the different prices that can be offered to the consumer through various booking mediums, such as hotel websites and competing booking engines.
A startup out of Denver, Hotel Engine, is the latest discount hotel booking site to pop up on the Interwebs, and, of course, claims to have the lowest prices, as do many others. But according to founder Elia Wallen, Hotel Engine actually has a case to the claim thanks to its use of a simple strategy that allows it to get around the rate-parity issue amongst its competition: Free memberships.
Wallen told the Denver Post that rate-parity laws that hinder competing public sites working with the same hotel do not apply to membership-based sites, and thus, those who take a few minutes to sign up will be greeted with friendly prices. Registration is free, but that simple step of requiring visitors to sign up before getting a price quote means it is not held accountable the way Expedia and others are by law.
Sticky legal situations overseas for U.S.-based online booking sites such as Expedia, Priceline, and Booking.com are nothing new. In 2011, Expedia was fined for advertising false prices in Europe, and in 2012, U.K. regulators accused the sites of price fixing and anti-competitive practices.
The latter of those lawsuits was thrown out earlier this year, but foreign entities aren't giving up on enforcing its national laws on digital businesses based overseas. This week, the French government sued Booking.com, claiming that its contracts with properties "prohibit hotels from offering prices for rooms at a price lower than those displayed on Booking.comís website," once again raising issues of anti-competitive behavior.
The problem with the practice is that the contracts take the power away from the hotel in terms of its ability to set prices and offer deals through its own website. In other words, if you want to do business with any of the online booking companies, you forgo your freedom to offer lower prices to other market segments via other channels, including your own reservation department.