The legal aspects of hotel rate parity

This research note delineates the conflict of hotel rate parity and key clauses of competition laws in both Europe and the U.S. We trace the origin of hotel rate parity to the principle of most favored nation (MFN) in international trade agreements. We show that rate parity challenges two pillars of...

Full description

Saved in:
Bibliographic Details
Published in:Tourism economics : the business and finance of tourism and recreation 2024-08, Vol.30 (5), p.1324-1329
Main Authors: Bianchi, Giuliano, Chen, Yong
Format: Article
Language:English
Subjects:
Competition
Competition policy
Courts
Dominance
Hotels
Hotels & motels
International trade
Law
Legislation
Most favored nation clause
Parity
Trade agreements
Travel
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This research note delineates the conflict of hotel rate parity and key clauses of competition laws in both Europe and the U.S. We trace the origin of hotel rate parity to the principle of most favored nation (MFN) in international trade agreements. We show that rate parity challenges two pillars of competition law. Under rate parity agreements, it is travel intermediaries—not hotels—that demand rate parity, which comes down to the dominance of travel intermediaries over small and independent hotels. The courts view MFN status as a hindrance to competition and therefore in violation of competition law. The trend and message in Europe are clear: the clause is most likely to be judged as not complying with EU competition law and its national equivalents. In the U.S. though, a lack of case decisions precludes us from reaching any conclusion about the fate of the MFN clause.
ISSN:1354-8166
2044-0375
DOI:10.1177/13548166231190142