It began simply enough. A small company wanted to make some money in online travel. So it joined Expedia Affiliate Network, where the online travel agency shares its hotel inventory with third-parties, sharing part of the commissions on any bookings.
To juice their returns, the entrepreneurs became assertive in marketing. The company bought ads on Google, using its AdWords program, which auctions ads tied to search terms. The affiliate outbid other players on keywords associated with hotel brand names.
InterContinental Hotels Group, Choice, and Hilton promptly sent the affiliate cease-and-desist notices, according to The Capitol Forum, a Washington-based investigative news and legal analysis publication. Capitol Forum reported the incident Tuesday, keeping the name of the affiliate anonymous.
“The IHG and Hilton letters accuse the affiliate of violating trademark laws, while the Choice letter specifically states that the company [Choice] entered into a ‘global agreement’ with Expedia that forbade Expedia and its affiliates from bidding on its brand’s keywords,” The Capitol Forum reported.
In effect, Expedia and its affiliates could bid all they wanted on “hotel downtown Indianapolis” or “Indianapolis downtown hotels,” for example, but not on a keyword that includes “Hilton” or its other brands.
The publication alleges that the hotel chains and online travel agencies are relying on “coordination” — a strong word, with potential legal ramifications.
Recent legal developments may change the calculations.
The publication also suspects that the behavior “harmed” consumers. That would be a potential trigger for an antitrust claim. The report doesn’t detail such harm, but courts have in some keyword-bidding cases outside of travel found that consumers indeed were adversely impacted by the practice.
Beyond Hotels
Other sectors have faced this issue. Around 2010, Carnival brands added language to their contracts with travel agencies to prohibit them from bidding on their trademarks as keywords in online search engines.
That led to the unintended consequence of higher placement in Google for the sponsored links from rival cruise lines. A Google search Wednesday for “carnival Caribbean cruise” fetched ads from rivals Disney and Celebrity in the second and third spots.
