European Union: Online Hotel Booking Sector Is Under The Spotlight Both In Turkey And Europe

Last Updated: 22 June 2017
Article by Av. Özlem Kurt Karayürek and Av. Gözde Yolal

In April 2017, The European Commission ("The Commission") published a report on "online hotel booking sector" ("Report") that has been investigated for a while and even being included in its some decisions.

For the preparation of the Report, the Commission has sent an electronic survey in July and August of 2016 to 161.000 hotels in 10 Member States, 20 online travel agents, 11 metasearch websites and 19 large hotel chains and reviewed the room price lists of hotels announced on metasearch websites and online websites of market players and in the reference period, which is from January 2013 to August 2016.

As the readers of this article would be aware of that within the reference period (prior to the end of the reference period) the Report focused on, the German Competition Authority's decision dated December 23, 2015 and Loi Macron, that result in the practice differentiation in Europe had already been published and the latter had already entered into force in France. After the decision in Germany and the new law in France, the Authorities in both France and Germany countries have gone far beyond the European competition law determinations in related sector by finding all the "most favoured customer" ("MFC") practices based on the parity clauses in favour of and room guarantees provided to only one or some market player/s in most of the cases against the competition. It seems that following the decision of the German Competition Authority and the effectivity of Loi Macron in France, the examination and observation of the Commission in the related sector have been accelerated, although the sector had already being monitored by the Commission priorly. 

By a strange coincidence, at the time where the Commission has accelerated its examination in the sector and most importantly almost around at the same dates with the German Competition Authority's decision and only shortly after the Report was published, an investigation has been launched against in Turkey and the Turkish Competition Authority adopted its first decision in the sector to be entirely against and the grounded decision shows the similarities with the German Competition Authorities' decision.

1. Content and Findings of the Report

The Commission's examination and the Report have focused on three main headings, which are (i) room price differentiation between sales channels (ii) room availability differentiation between sales channels and (iii) OTA commission rates.

While analysing the market under these headings, the Commission could observe theoretically the effect of the switch of the market players from wide favoured customer practice to narrow wide favoured customer practice in the market.

Although the meaning of the terms of "wide most favoured customer" ("wide MFC") and "narrow most favoured customer" ("narrow MFC") are well known in the sector, we consider necessary to provide you our readers with the definition of the practices, as both in Commission decisions and the Turkish Competition Authority's decisions especially the effects of the switch from wide MFC to narrow MFC have been discussed.

With wide MFC  practices or clauses in the agreements between market players and hotels, market players oblige hotels to offer the best conditions to itself in all the sales channels, regardless of it is online or offline or offered to other sale agencies or applied by hotels themselves. Unlike wide MFC practices, narrow MFC practices or clauses in the agreements between market players and hotels provide restrictions on the sales conditions only related to hotels' online bookings and oblige hotels not to offer better conditions on the hotel's own website. In this context, hotels will be able to offer better sales conditions including but not limited to room availability or price conditions to other online travel agencies ("OTA"), as well as to offer more advantageous conditions for their customers by their offline sales channels, such as phone bookings.

After providing you with the definition of wide MFC practices and narrow MFC practices, this is the time to inform you our readers about the findings of the Commission based on ratios and numbers under these three headings herein below.

a) Room price differentiation between sales channels

The Commission found out that, (i) 47% of the hotels that responded to the electronic survey said that they were not aware that market players had switched their practices from wide to narrow; (ii) 79% of the hotels that responded to the electronic survey said that they had not price differentiated between OTAs. The reasons most frequently given for not price differentiating were the fear of penalization clause in their contracts; the difficulty of managing different prices on different OTAs, and not wanting the hotel's website to appear as more expensive than the OTAs; (iii) For the 21% of respondents that did price differentiate between OTAs, the most frequent reason given was to increase the hotel's visibility on a particular OTA; (iv) the switch from wide to narrow MFC led to an increase in room price differentiation between OTAs by hotels in eight of the ten participating Member States, (v) the entry into force of the Loi Macron led to an increase in room price differentiation between OTAs by hotels in France; (vi) the prohibition of's narrow MFC led to an increase in room price differentiation between OTAs by Hotels in Germany.

b) Room availability differentiation between sales channels

From the stand point of room availability, (i) 69% of the hotels that responded to the electronic survey said that they had not differentiated between OTAs as regards room availability, (ii) in France and Germany taken together, 37% of the hotels had differentiated between OTAs for room availability and (iii) more than 80% of hotels without any limitation on a country basis said that they had not changed their behaviour as regards differentiating between OTAs for room availability since the switch to narrow MFC.

c) OTA commission rates

90% of hotels that responded to the electronic survey said that there had been no changes in the basic commission rate charged to them by OTAs. Only 3% of respondent hotels said that they had traded better room availability in return for a lower commission rate.

With regard to these findings of the Commission based on ratios, the Commission emphasized that the participation in the questionnaire in most of the countries is low; hotels did not understand some questions; price differentiation is not actual differentiation but referring different prices for rooms in different categories or differentiation like cancelation rights; France and Germany should not be taken into consideration due to their approach to prohibit the MFC practice in full, the monitoring exercise was carried out twelve months after market players switched to narrow MFC and six months after the adoption of the most recent prohibition decision in Germany against; it is possible that the sector might not yet have fully adapted to the changes made to the major OTAs' parity by the virtue of this short time period of examination; furthermore, the terrorist attacks that occurred in France and Belgium during the monitoring period may have affected the results relative to more typical tourist seasons.

2. The Last Situation On Online Hotel Booking Sector In Turkey

The investigation initiated with regard to by the Turkish Competition Authority ("Authority") upon the complaint of TURSAB (Association of Turkish Travel Agencies), which attracts public attention, started around the same dates when the Commission focused on the same topic.

The Authority decided to impose an administrative fine on due to its "best price guarantee" or other practices. The Authority resolved further that could not benefit from the individual exemption, since it does not meet the conditions necessary for the provision of the individual exemption, even though promised during the investigation to switch to narrow MFC and revise its contracts with hotels accordingly.


Although the aim for this Report was to create a common approach in the related sector, the report reveals that the observation of the Commission is not adequate to create a general and common practice in Europe and the market shall continue to be a subject of observation. In other words, although there has not been a consensus and clearness between the competition authorities' approaches yet, general and weighted tendency is in the direction of which the "narrow most favorable customer" practice does not result in the violation of competition. Considering the grounded decision of the Authority, it is the impression that the Authority's tendency is to decide in the direction of the approach embraced by the German Competition Authority ("Bundeskartelamt"). However, on grounds that the relevant product market has been defined for the first time with this decision; the Authority observes the developments and decisions of the related Authorities in Europe as well as Authority's tendency to shape and form its practice in the light of those developments in Europe, it seems that Authority would continue observing the online hotel bookings market in parallel which European Competition Authorities to do so.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Av. Özlem Kurt Karayürek
Av. Gözde Yolal
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