'Hotel chains collude with discount websites to fix room prices' as Expedia and Booking.com are named in OFT inquiry

Hotel chains and booking websites have been accused of working together to ‘fix’ prices for consumers looking for a discount.
Websites such as Expedia and Booking.com have joined forces with hotel groups to protect their profit margins by ensuring the rates on ‘discount’ websites are actually the same as the normal price, an industry insider has said.
Dorian Harris, CEO of discount hotel site Skoosh.com, has said he was forced out of the market after attempting to undercut his rivals by offering cheaper prices.

Intercontinental Hotels Group, which operates luxury hotels such as the Intercontinental London Park Lane (pictured) is under investigation by the OFT

Mr Harris has even said he was threatened with violence by hotel owners angry at the possibility of their rooms being sold at rates cheaper than those agreed with the major booking portals.
Usually if hotels have spare rooms available, they sell the capacity on to estate agents and discount booking agencies, which then mark up their prices by about 25% before offering them to the public.
As well as earning the hotels more money overall, these high prices also protect the reputation of the hotels, and let them keep their prices high.
But Mr Harris says that when he decided to beat the competition by offering rooms on Skoosh.com at a smaller mark-up he lost 70% of his business after hotel chains demanded he raise his prices to stay in step with the rest of the industry.
He told The Sunday Times: ‘We started getting some calls from angry and confused hoteliers insisting that we were selling their rooms too cheaply ... I realised a [rival] website had been on to them threatening all sorts of nonsense if they didn't either remove their hotel from Skoosh or force Skoosh to raise its prices.’
In a phone call recorded by Harris, a hotel manager in Prague whose hotels he had discounted told him: ‘You're gone. You will see what's going to happen to you in one week. If you are in Prague then you will see what it means to be threatened.’

Expedia is also under investigation for its practices around offering discount hotel rooms

The Office of Fair Trading (OFT) opened an investigation into Expedia and Booking.com in 2010, looking at allegations they had colluded with InterContinental Hotels Group (IHG), the world's biggest provider of hotel rooms.
It opened a public consultation on new industry proposals, which ended on Friday.
In them the three companies proposed a set of commitments, which would allow discount sites cut into their profit margin to offer cheaper rooms. However, the companies added that offering these commitments was not an admission of any past wrongdoing.
Anti-competitive business agreements, such as price-fixing, are illegal in the UK, and in the most severe cases can result in an unlimited fine and up to five years in prison.
Legal action has also been launched in America. Papers filed in Texas claim that a British conference firm organised seminars where hoteliers would meet with discount site representatives to agree prices for their rooms.
Searches of discount websites for hotels in the InterContinental portfolio in London and Chicago have shown that several discount websites offer the same prices as booking directly.
Another insider told The Sunday Times: ‘Most people know this is going on but the big firms are benefiting and the small operators are often too scared to speak up for fear of repercussions.’
The OFT said it could not comment while its investigation was going on. However, the watchdog has said in the past that it would like hotels and websites to be more transparent about the discounts they offer.
It has not yet been determined whether Booking.com, Expedia or IHG have broken the law.
Booking.com declined to comment on the OFT probe. IHG said it had ‘worked closely with the OFT’ to agree commitments on how to operate in future.
Expedia said that it welcomes the draft commitments, and said it expects the OFT to close its investigation without taking any action.
IHG declined to comment on Mr Harris's allegations, but has said previously that it has 'worked closely with the OFT' during the probe