Expedia investigated for plotting with hotel giants to squash competition

Expedia Group is under investigation by four US attorneys general for allegedly working with the world’s biggest hotel groups to stifle online competition.

In documents filed last week, the Utah attorney general’s office revealed it was examining whether the OTA violated antitrust laws alongside Marriott, Hilton, Hyatt and Caesars Entertainment Corporation. Other states have joined the investigation, the AG’s office said. 

Choice Hotels International, Red Roof Inns, Wyndham Hotels & Resorts and Six Continents Hotels are also named as defendants.

The Utah-based TravelPass Group, which sells room inventory through Google search ads, claims the hotels and Expedia worked together to limit the results of Google searches, damaging competition and keeping prices high.

The allegations are also the subject of a pending class-action lawsuit filed by TravelPass in Illinois last December.

According to TravelPass, since 2014 the hotel companies have avoided price competition by not bidding on one another’s brand names in Google searches. Prior to that, the hotel companies would bid on keywords that included each others’ brands, as well as their own, in a market which encouraged an open bidding process.

The lawsuit alleges a Google representative told TravelPass last year the hotel companies previously routinely bid on one another’s brands and then suddenly stopped.

Expedia coordinated the collusion between the hotels, acting as an intermediary and providing monitoring reports on compliance with the agreement, TravelPass alleges.

The OTA also allegedly agreed not to bid on branded keywords and pressured operators like TravelPass, with access to hotel room inventory through Expedia, not to bid either – with those that did punished by loss of inventory.

Utah attorney general Sean Reyes’ office stated there was “reasonable cause to believe that a violation of the Utah Antitrust Act has occurred based upon the allegations set forth in the lawsuit.”

Under US federal and state antitrust laws, companies cannot conspire to harm or reduce competition.

TravelPass said in its complaint: “The defendant hotels’ illegal activities have severely reduced, and in many cases even eliminated, the revolutionary benefits of the internet economy for hotel consumers.

“The conspiracy has left in its wake an online travel booking marketplace characterised by deliberately limited information and high transaction costs.”

The hotel groups named in the investigation have not made comment on the allegations.

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