Hyatt, Hilton, Marriott Among Hotel Heavyweights Facing Antitrust Class Action Over Search Advertising

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Some of the largest hotel operators in the world are the defendants in a proposed class action filed in Illinois over the companies’ allegedly collusive agreement to eliminate branded keyword search advertising against each other. The defendants’ actions, the plaintiff alleges, have deprived consumers of “the free flow of competitive information” when searching for hotel rooms online, and has driven up prices. The 30-page lawsuit compares the alleged competition-suppressing conduct of the defendants—Hyatt Hotels Corporation; Hilton Worldwide Holdings, Inc.; Intercontinental Hotels Group, PLC; Marriott International, Inc.; Choice Hotels International, Inc.; and Wyndham Worldwide Corporation—to if Coca Cola and Pepsi reached a truce to not use each other’s names when comparing products in advertising. 

From the complaint:

“The scheme is simple: each hotel Defendant agreed it would refrain from using certain readily available online advertising methods to compete for consumers shopping for hotel rooms. The agreement prevents competitors from bidding for online advertising that uses competitors’ brand names. So, for example, Hilton Hotel could not use competitor Hyatt’s brand hotel name to construct a search response that would present comparison benefits, such as price and quality, between the two hotels.”

Hotel rooms are sold either directly through a hotel’s website or through online travel sites and their affiliates, the lawsuit says. The case states online travel sites, while serving as valuable sales platforms for the defendants, can be costly since they place “downward pressure” on the prices of rooms by way of exposing consumers to a wide variety of competitive options.

To eliminate this problem, the lawsuit alleges, the defendants agreed to impose restrictions on the use of branded keyword search advertising on Google and Bing to prevent consumers from seeing competing advertisements for rooms. To accomplish this, the plaintiff charges, the defendants in 2015 reached a two-fold agreement. 

“First, each of the Defendants agreed they would refrain from bidding for each other’s branded keywords. Second, each of the Defendants agreed they would insert contractual clauses into their lodging agreements with [online travel agencies] to prohibit those [online travel agencies] from bidding on the branded keywords of the hotel Defendant, and to require the [online travel agencies] to attempt to compel any affiliated online travel agencies to refrain from bidding on branded keywords.”