Booking.com added to EU list for strict digital control
The European Union's Digital Markets Act (DMA) classifies the company as a gatekeeper, requiring changes to the way it handles rate parity in its hotel contracts
The European Commission, the EU's executive arm, said Monday that it's classifying Booking Holdings as an online gatekeeper and that the company's Booking.com hotel reservation site meets the threshold to be considered a "core platform service" under the 27-nation bloc's Digital Markets Act. The sweeping set of rules is designed to prevent Big Tech platforms from dominating online markets.
Key takeaways
- European Commission Vice President Margrethe Vestager said the decision means holidaymakers "will benefit from more choice and hotels will have more business opportunities”;
- Analysts predict that Booking Holdings may have to eliminate tight rate parity clauses. These clauses ensure that the company gets the best rates from hotels, such as those on the hotels' own websites. This change could allow hotels to offer better rates directly, potentially increasing their market share;
- Despite previous instances of rate parity bans in certain European countries, there hasn't been a significant shift in market share away from online travel agencies like Booking Holdings. This is because Booking Holdings' strong ranking algorithm and reliance on independent hotels that lack robust online marketing could offset any direct discounts from hotels, maintaining the status quo;
- Norwalk, Connecticut-based Booking Holdings owns a number of other travel sites, including Cheapflights, Kayak.com and Priceline, as well as restaurant reservation platform OpenTable, but those platforms weren't included in the EU decision.