The operator of Holiday Inn and Crowne Plaza hotels and two of the UK's biggest online travel agents were under investigation today for signing a potentially unlawful deal to limit discounts on rooms.
Booking.com and Expedia entered into separate agreements with Intercontinental Hotels Group (IHG) which are provisionally believed to have infringed competition law, the Office of Fair Trading (OFT) said.
The arrangement between Booking.com and IHG is still in place, while Expedia allegedly violated rules between October 2007 and September 2010, the OFT added.
The investigation focused on IHG, Booking.com and Expedia but the competition regulator warned the alleged practices are potentially widespread in the industry.
The OFT said all parties will now have a full opportunity to respond to its findings before the watchdog decides whether competition law has in fact been infringed.
IHG said its arrangements with online booking agents were "compliant with competition laws and consistent with the long-standing approach of the global hotel industry".
Expedia and Booking.com are respectively owned by American parent companies Expedia Inc and Priceline.com. UK hotel room revenue amounted to around £10.1 billion in 2010, the OFT added.
The OFT said the alleged infringements were anti-competitive in that they could limit price competition between online travel agents and make it more difficult for new online travel agents to gain market share by offering discounts to consumers.
The investigation was launched in September 2010 following a complaint submitted by a small online travel agent, alleging that it was being prevented by various hotel chains from offering discounted sale prices for room only hotel accommodation, the OFT said.
Clive Maxwell, OFT chief executive, said: "We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers."
The Competition Act 1998 prohibits, among other matters, agreements and practices that prevent, restrict or distort competition in the UK.
IHG has more than 661,000 rooms in over 4,500 hotels in nearly 100 countries, operating nine hotel brands - InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, Even Hotels and Hualuxe Hotels and Resorts.
Booking.com claims to be the number one online hotel reservation service in the world, offering more than 210,000 hotels, and is available in 41 languages.
Expedia offers a directory of 80,000 accommodation properties worldwide and four million rooms, as well as fares on more than 450 airlines.