On May 2, 2023, the European Commission made a landmark move to regulate online marketing by implementing the Digital Markets Act (DMA). This regulatory framework aims to ensure fairness among digital players, protect internet users, and combat potential anti-trust concerns by major technology platforms (a.k.a. “gatekeepers”).
NB: This is an article from Cendyn, one of our Expert Partners
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These players – regardless of their base of operations – play a significant role in the European internal market; each serving as primary access points for companies seeking to reach their customers. By targeting these powerful entities, the DMA seeks to level the playing field, foster innovation, and provide consumers greater freedom of choice. You can read more about the DMA here.
Booking.com designated as a gatekeeper
On May 13, 2024, the European Commission (EC) designated Booking.com as a “gatekeeper” under the DMA. This designation applies to the company’s intermediation service and gives them six months to comply with DMA obligations. The goal is to ensure more freedom and choice for end users and fair access to gatekeeper services for business users. For further details, read the European Commission’s announcement here.
The future landscape for European hoteliers
The EC’s decision to label Booking.com as a gatekeeper carries significant implications, particularly for the hospitality industry. This move is expected to lead to more competitive and transparent pricing, benefiting both travelers and hoteliers alike.
For travelers, this change heralds increased access to competitive pricing and exclusive offers. With enhanced competition, consumers can expect better deals and a wider range of choices when booking accommodations.
EU-based hoteliers are also poised to reap significant benefits from this ruling. Hotel operators who have invested in technology systems and marketing strategies stand to gain the most. These investments include optimized branding websites, customizable booking engines, and adequate investments in digital marketing tools to attract travelers. By enabling hotels to be more competitive on their sales channels and offer unique offers and promotions, the EC’s decision empowers hoteliers to connect with the right guests, drive guests to book direct, and grow loyalty and revenue with each guest. Overall, it will enable hoteliers to have fairer access to consumers without incurring additional charges through high online travel agency (OTA) commission fees, thereby improving overall profitability.
It is unknown how Booking.com will respond to leverage this ruling in their favor. Some OTAs have typically penalized hotels that do not have parity by listing properties lower in the search results. Therefore, to truly benefit, hotels must continue investing in their direct booking channels and marketing strategies to avoid losing bookings to third-party platforms.
The ultimate question remains: Will hotels benefit from this change? The answer depends largely on their preparedness. Hotels equipped with forward-looking technology and marketing tactics will undoubtedly maximize the benefits of the DMA.
