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EU’s New Digital Market Act to Protect Hotels from ‘Gatekeepers’

Photo source: European Parliament

Photo source: European Parliament

EU lawmakers agreed recently to the adoption of the Digital Markets Act (DMA) aimed at ensuring fair competition and more choice for users and ultimately protecting hospitality enterprises from so-called “digital gatekeepers” which exercise disproportionate power towards their business users and consumers.

Europe’s hotel industry through HOTREC, the umbrella association representing hotels, restaurants, bars and cafés, welcomed the announcement and commended the EU for setting new rules targeting digital gatekeepers.

Once fully applicable, the DMA will blacklist certain practices used by large platforms acting as “gatekeepers” and enable the Commission to carry out market investigations and sanction non-compliant behavior.

Among others, the DMA also reigns in online platform gatekeeper power by setting out a ban on narrow price parity clauses which prevent hoteliers from offering a better price on their own channels than the platform and providing business users with better access to the data generated by their listings.

“For the past decade, hoteliers have been on the receiving end of unacceptable behavior by dominant OTAs on a ‘take it or leave it’ basis. Today’s agreement on the DMA gives a clear signal to digital giants: behave like partners, and not gatekeepers, towards consumers and business users,” said the Chairman of HOTREC Working Group on Distribution, Markus Luthe.

According to HOTREC, the three main players in the OTA market are Booking Holding, Expedia Group and to a lesser extent HRS Group, with an aggregated market share of 92 percent. Booking.com holds a share of 68.4 percent in the OTA market and its dominance has been rising over the last six years by more than 8 percent.

Margrethe Vestager, Executive Vice-President of the European Commission in charge of Europe fit for the Digital Age. Photo source: European Commission / Photographer: Nicolas Peeters

Margrethe Vestager, Executive Vice-President of the European Commission in charge of Europe fit for the Digital Age. Photo source: European Commission / Photographer: Nicolas Peeters

“Large gatekeeper platforms have prevented businesses and consumers from the benefits of competitive digital markets. The gatekeepers will now have to comply with a well-defined set of obligations and prohibitions. This regulation, together with strong competition law enforcement will bring fairer conditions to consumers and businesses for many digital services across the EU,” said the Commission’s Executive Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager.

According to HOTREC’s hotel distribution study, between 2013 and 2019, the market shares of OTAs have steadily increased in the European hotel sector from 19.7 percent in 2013 to 29.9 percent in 2019. At the same time, the share of direct bookings dropped across Europe from 57.6 percent in 2013 to 45.5 percent in 2019.

“Practices such as narrow price parity clauses and data retention ultimately act as a disincentive for the digitalization of hotels and entrench the dependence of hoteliers towards OTAs. The whole sector can now better tackle its digitalization,” Luthe said.

HOTREC

Photo Source: HOTREC

Welcoming the news, HOTREC Director General Marie Audren said the recovery of the European hospitality and tourism sector is only just beginning. “There is still much work to do with policy makers to bring back pre-Covid levels of activity and business as well as support its digital and green transition,” she said. 

“What we want is simple: Fair markets also in digital. We are now taking a huge step forward to get there – that markets are fair, open and contestable,” added Vestager.

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