Severe blow for Business Model in Germany

Heavy blow for The world’s largest portal for hotel accommodation may no longer prohibit its contract partners from offering rooms at a lower price than stated on the platform. This was decided on May 18 by the German Federal Court of Justice in Karlsruhe. “The judges saw this practice as incompatible with German and international antitrust law,” a spokesman for the Dehoga hotel association said after the ruling was announced. Cartel Office chief Andreas Mundt, who was among the plaintiffs, welcomed the ruling.

For years, hotel associations with the support of the German Federal Cartel Office have been suing against the alleged superiority of online hotel portals. Hoteliers report that, HRS and Expedia in particular ruthlessly dictate their contract conditions to mostly medium-sized accommodation providers. A study by the University of Applied Sciences of Western Switzerland in Valais found that only a quarter of all European overnight accommodation establishments still feel they are treated fairly by the portals.

For example, hostels are forced to participate in discount campaigns or to grant guests generous cancellation conditions. In addition, there are agency commissions, which often amount to between 15 and 25 percent of the accommodation price, while the hoteliers themselves usually only have a margin of between three and five percent.

The industry achieved its first court victory in 2015 against the Cologne-based hotel broker HRS. At that time, the Düsseldorf Higher Regional Court prohibited the long-established booking rival from always demanding the lowest rates from its hotel partners.

However, the dispute was only about the so-called “wide best price clauses”, with which HRS was prohibited from offering lower prices on competitor portals. The controversy over the “narrow best price clauses” however continued. With them, the portals could prohibit their hotel partners from undercutting the online hotel rates listed with them with their own price lists, for example, at the reception desk.

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