New SEEK Policy Brief Published
The way search results are listed on Internet platforms has a decisive influence on which goods are purchased and which services are booked. However, not every position and recommendation on these platforms is necessarily in the interest of the users. Our results show that a room offer is less visible on a booking portal if the hotel offers the same room cheaper on a competing booking portal or its own website.
By making their recommended search results dependent on prices listed on other channels, booking portals may maximise their profits. However, this is not necessarily in the interest of their customers, who assume that the “recommended” search results represent the best offers for them. This strategy also entails certain risks. A portal that lists its results according to how hotels set prices on other portals influences the price-setting strategy of hotels across all sales channels. If such a behaviour forces hotels to set similar prices on all sales channels, this can to a certain extent be regarded as a substitute for price parity clauses. In the past, booking portals used these clauses to force hotels to always set the same prices on all distribution channels. As this can hinder competition between booking portals, these clauses have been banned by competition authorities and lawmakers in several European countries. Furthermore, such behaviour by portals may lead to search results that are not in line with consumer interests, which reduces the search quality for users. More information in our recently published ZEW policy brief (in German).