After Accor, Hilton, InterContinental Hotels Group and Marriott International pooled together $50 million to invest in meetings technology platform Groups360, some in the managed travel industry voiced concerns about the potential for an antitrust situation, including collusion and exclusivity concerns.
“It will be interesting to observe how Groups360 will manage its board, since each of the major investing hotels have a seat on the board, and [how it will manage] the information regarding group business to avoid antitrust issues,” said one industry technology owner. “The hotels’ Groups360 transaction is the resurrection of StarCite in terms of structure,” the person said, referring to the meetings management technology. Many of the major hotels were on the board of StarCite, and surprise, surprise, they discussed rates.”
The owner of another industry technology product was told by a group sales rep from a hotel that if the technology company wanted inventory from that hotel company, it soon will have to go through Groups360. “By its essence, it’s an anticompetitive stance,” the technology owner said. “If five different suppliers say, ‘You now have to go through this other place that we own and we’ll control the terms and distribution and fees and prices there,’ then that’s just antitrust. I’m surprised their lawyers didn’t catch that before they got into the deal.”
That tech company owner also ventured that the hotel companies aim to move all meeting sourcing for their spaces to the Groups360 platform and then rip off the Band-Aid to eliminate commissions paid by the hotels to group intermediaries. Most major hotel companies reduced such commissions from 10 percent to 7 percent over the course of 2018, causing consternation among meeting planners and corporations’ strategic meetings management programs.
Groups360 executive chairman David Kloeppel said the company had been advised by antitrust lawyers “throughout the creation of the investment process” and that it is sensitive to antitrust matters. “The objective of the platform is to make it simpler and easier for planners to book meetings,” Kloeppel said. “We understand that anybody who wants to list product on our platform will be sensitive to who has access to their own pricing information. We have internal protections to make sure pricing doesn’t get into the wrong hands.”
The platform, which allows meeting planners to search for hotels and future rates, is closed, and planners have to get login credentials and be vetted to use it. Plus, Kloeppel said, its rate projections are determined by an internal algorithm that is “not anything an external party gave us. It’s our own secret sauce, so there’s not much concern over antitrust matters because it’s not anyone’s specific information.”
Though Groups360 has taken precautions to protect hotel companies’ sensitive data like pricing, concerns about rate collusion arise. “That dynamic can change significantly if the hotels are now invested or own a piece of the platform,” said American Antitrust Institute president Diana Moss. “If you have an ownership interest, you have a modicum of control over the decision-making of the platform. The antitrust concern then, potentially, is that the information can be transferred from owner to owner using the platform as a conduit, kind of as a pipeline, so information could essentially make its way back to Marriott or back to Hilton. And that information is potentially competitively sensitive.”
Should hotel companies with investment stakes in Groups360 list their meeting space exclusively on the platform—recall the tech company owner who was told meeting planners would have to go through Groups360 to access those hotels’ spaces—”that notches up the concern level from an antitrust standpoint,” Moss said. Groups360 president and CEO Kemp Gallineau has said instant booking for simple meetings is on the company’s road map. Moss noted, “If moving from just a search platform to a booking platform, that means there will be more pricing information floating [around] and could be easily transferred from owner to owner” so that could imply a tacit agreement.
That means the hotel owners, even if not agreeing outright to fix prices, could exchange “enough information for them to get a good bead on what rivals are doing. And with very few rivals in a market, as you have with hotels, the incentives are much stronger to collude than to compete,” Moss said. “I’m not saying this is a problem, but it certainly puts up some red flags we would absolutely want to keep tabs on.”
Kloeppel deflected the question about the hotel companies making their inventory available only through Groups360 by saying that was for the hotel companies to answer. When asked whether the hotel companies’ combined investment constitutes a controlling interest or what voting power they have, Kloeppel said, “We’ve agreed with the investors not to disclose the terms of the deal, so I can’t comment on that.”
An IHG spokesperson, when asked whether it would require parties to go through Groups360 to access IHG meeting space, said, “Our focus in the near term is to develop our direct booking capabilities on meetings.ihg.com and the Groups360 platform.”
Marriott global officer of digital, distribution, revenue strategy and global sales Brian King said: “In today’s instant-access digital world, our customers have told us that the current shopping and booking process for small groups is out of sync with their day-to-day shopping habits. This process is even more cumbersome when a meeting planner must source across multiple brands. The goal of Marriott International’s investment in Groups360 and its proprietary GroupSync technology is to bring simplicity to the planning process to ultimately benefit both meeting planners and hotels.”
Hilton declined to comment, and Accor had not commented by press time.
There are others who don’t seem concerned by the hotel companies’ investment or by Groups360’s plan to become another online meetings booking platform. “We work very closely with Hilton, Marriott, IHG and Accor, and this cooperation has grown even closer as we secure more and more global corporate clients,” said Meetingsbooker.com founder Ciaran Delaney, whose site currently offers instant meeting room booking. “In some cases, we already power online bookings for their franchised property websites. [As Groups360’s] product emerges in the coming years, we look forward to exploring opportunities with the hotel groups.”
Delaney said his company isn’t worried about Airbnb’s or hotel groups’ moves to acquire or invest in simple meetings solutions. “Not a chance,” he said. “It’s helping to put simple meetings on the map. … Once their system is live in a few years, our network will be even bigger. Ultimately the customer will decide, as well.”
This content was originally published here.