Booking site crackdown failed to cut online hotel prices – but unlocked cheaper deals offline
A major French policy designed to make hotel prices more competitive online may not have worked as intended, but it did unlock cheaper deals for customers booking directly with hotels.
A new study of European hotel markets finds that banning ‘price parity clauses’ – rules which stop hotels from offering lower prices outside major booking platforms – had little impact on publicly advertised online prices.
Instead, savings appeared in less visible places – direct bookings made offline, where prices fell significantly and hotels saw a shift in bookings away from online platforms.
Key findings
· Small and statistically insignificant drop in hotel prices on major online platforms and hotel websites
· Prices fell by around 5% for bookings made directly with hotels offline
· Customers shifted away from online travel agents towards direct booking
· Offline bookings – the largest channel at the time – increased their relative sales share
· Total consumer savings were meaningful, but modest relative to the overall market
Why this matters
Online platforms like Booking.com and Expedia play a major role in how people find and book hotels.
For years, many of these platforms used ‘price parity clauses’ to prevent hotels from offering cheaper deals elsewhere, including on their own websites.
Policymakers expected that banning these rules would lead to lower prices across the board. However, the study suggests the reality is more complicated, and that headline online prices may not tell the full story.
Hidden cheaper rooms
For most travellers, booking a hotel is simple - search the internet, compare prices and click - but this research suggests that the best deal may not always be the one you see.
Instead, customers willing to call, email or walk into a hotel directly were more likely to find lower prices after the policy change. In other words, the cheapest room may be the one that never appears online.
What actually changed
The study focuses on France, which in 2015 became the first country to fully ban price parity clauses in the hotel sector. Researchers analysed data from 166 hotels across Europe, comparing France with countries where the rules were still in place.
They found:
· Online prices showed small decreases of around 1–2%, but these are not statistically distinguishable from zero
· Offline prices dropped significantly, around 5% or €8.50 per booking
· Bookings shifted away from online platforms towards direct offline channels
Why online prices didn’t fall
One reason may be that online platforms still have powerful ways to influence hotel behaviour. Hotels that offer lower prices elsewhere risk being pushed down search rankings, making them less visible to customers.
As a result, many hotels appear to have avoided cutting prices on visible online channels, even after the rules were removed. Instead, they offered discounts where platforms were less able to monitor - in direct, offline bookings.
What customers may be missing
The findings suggest that:
· Not all price competition is visible online
· Some of the best deals require extra effort to find
· Consumers who rely only on platforms may miss cheaper options
At the same time, many users continue to use online booking tools for the convenience and additional services they offer – such as price comparison, guest reviews, and streamlined booking – even if it means paying slightly more.
A mixed success
The policy did lead to more competition between booking channels, lower prices for some consumers and a shift away from platforms.
But overall, the impact was smaller than expected, especially on the highly visible online prices policymakers hoped to change.
Our study suggests that simply banning restrictive rules may not be enough to create fully competitive digital markets. Instead, platforms may adapt in ways that preserve their influence, meaning that further measures may be needed to improve transparency and competition.”
Why it matters now
The findings are particularly relevant as new regulations, including the EU’s Digital Markets Act, aim to curb the power of large online platforms.
Understanding how businesses respond in practice is crucial to ensuring these policies deliver real benefits for consumers.
Publication details
The paper was carried out by economists from The University of Manchester, the University of Oxford, the European Commission’s Joint Research Centre and partner institutions across Europe. It was published in The Economic Journal.
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