In December 2020, the European Commission introduced the Digital Markets Act (DMA), a regulatory framework aimed at fostering fair competition and encouraging innovation in the online economy. While this new legislation signifies a significant shift in the rules of the game for electronic commerce, it has gone largely unnoticed by many, including the hotel industry. In this article, we will delve into the details of the DMA, its implications for hoteliers, and why it’s important to pay attention to this development, especially as the initial impacts of the legislation will begin to be seen in January 2024.
Understanding the DMA and Its Impact on Hoteliers:
The DMA was proposed by the European Union (EU) to ensure fair play in the digital environment and protect users. Its primary objective is to limit the power of companies acting as gatekeepers to the online platform economy, who control access to digital markets, and prevent them from abusing their dominant market position. The regulation includes a range of obligations for these gatekeepers and prohibits unfair practices, such as favoring their own services over competitors, using collected data for unfair competition, and requiring vertical interoperability with other platforms to foster fair and open competition.
While the hotel industry has largely overlooked the DMA, these new regulations could have a significant impact on the digital ecosystem for hotels. On one hand, they provide an opportunity for hoteliers to exercise greater control over their online distribution and negotiate fairer conditions with gatekeepers. On the other hand, the changes gatekeepers will have to make to comply with the DMA requirements may have unforeseen consequences, which hoteliers should be prepared for.
Identifying Online Gatekeepers:
The DMA aims to identify and control major online platforms that act as gatekeepers to electronic commerce. To be considered a gatekeeper, a company must meet specific criteria, including the size and scope of its services in the EU, its role as an intermediary between users and businesses, and its long-term influence on the market. Gatekeepers are defined as companies that provide basic platform services in the EU, have a substantial impact on the internal market, act as an important gateway for business users to reach consumers, and exert significant influence on the digital marketplace and end users.
Implications for Hoteliers:
The DMA brings several potential implications for companies in the hotel industry:
- Greater Transparency: Platforms will be required to be more transparent about how they rank and present accommodation options to users. This may result in changes to algorithms and policies.
- Data Usage Restrictions: Gatekeepers will face restrictions on how they can use the data collected through their platforms. For example, they may be prohibited from using hotel data to compete directly with the hotels themselves.
- Increased Interoperability and Data Portability: Hotels may have the ability to easily move their listings and customer data from one platform to another.
- Prohibition of Unfair Trade Practices: Gatekeepers will be prohibited from forcing hotels to offer the same rates on all platforms, known as rate parity clauses.
- Third-Party Access: Gatekeepers may be required to allow other travel service providers to access their platforms and offer complementary services like travel insurance.
Compliance and Control: The DMA includes significant controls to ensure gatekeeper compliance, including regular monitoring and the possibility of severe penalties for serious breaches. Penalties can amount to up to 10% of the annual global turnover of a company
Booking.com’s Gatekeeper Claim: During the implementation of the DMA, the European Commission identified potential gatekeepers and gave them until July 3, 2023, to respond. Booking.com released a press release stating that it did not meet the DMA criteria to be considered a gatekeeper. However, this claim raises doubts about Booking.com’s compliance with the criteria and its willingness to adhere to the regulations imposed on gatekeepers. If the Commission accepts Booking.com’s self-assessment, it could provide the company with an unfair advantage and further strengthen its market dominance, impacting the hoteliers’ dependency on its distribution services.
The Digital Markets Act is a significant step forward in regulating the digital ecosystem, promoting fair competition, and protecting user interests. It offers hoteliers the opportunity to gain more control over their online distribution and negotiate fair agreements with online platforms. However, Booking.com’s gatekeeper claim raises concerns about compliance and potential unfair advantages. It is crucial for hoteliers to stay vigilant and actively monitor the evolving landscape shaped by the DMA. By understanding the implications and potential consequences, hoteliers can navigate the changes and work towards building a more balanced digital ecosystem in the hospitality industry.
Here you can read the full article.
