The UK competition watchdog is investigating three of the world’s biggest hotel chains for sharing information they could have used to coordinate prices.
Hilton, Marriott and Holiday Inn owner InterContinental Hotels Group (IHG) are being investigated by the Competition and Markets Authority (CMA) to find whether they shared sensitive information through an analytics tool.
The tool, named STR, tracks hotels’ occupancy, average room rates and revenue across 94,000 globally.
US analytics firm CoStar, which owns STR, is also under investigation.
The CMA said ‘no assumptions should be made about whether the law has been broken’.
But it added when rivals share commercial information through these means it can allow them to predict others’ moves more easily.
This undermines competition because by reducing the ‘uncertainty competing businesses normally have about how each other will act’, they can ‘coordinate their behaviour’ based on what others might do.
The CMA’s investigation is part of its push to ensure new technology, such as pricing algorithms, does not harm competition.
Holiday Inn owner IHG and Marriott are both being investigated by the UK’s competition watchdog
Hilton is the third hotel chain being investigated by the CMA, which said ‘no assumptions’ should be made about whether any laws have been broken
A pricing algorithm is a system that sets or recommends pricing levels and is usually based on current and past data about the market.
The CMA said: ‘Companies use various types of data analytics tools and algorithms to help them make commercial decisions.
‘This can bring benefits including more intense competition, lower costs, and faster changes in prices to better match demand and supply in markets.
‘However, when rival businesses share competitively sensitive information – including through a third-party data analytics provider – this reduces the uncertainty competing businesses normally have about how each other will act.’
IHG, which is listed on the FTSE 100 and headquartered in Windsor, saw its shares fall 5% on Monday morning.
But the stock was also affected by the war in Iran, which has hit confidence in Middle East tourism.
An IHG spokesperson said the group would ‘co-operate fully with the CMA’s inquiries’, while CoStar said the firm was ‘happy to provide the CMA with assistance’.
CoStar added: ‘We are surprised at the CMA’s interest in a long-standing hotel data analytics and benchmarking platform, that for decades has been used by companies and government entities alike to better assess market dynamics.’
Hilton and Marriott have been approached for comment.