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The legal aspects of hotel rate parity

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  • Giuliano Bianchi
  • Yong Chen

Abstract

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.

Suggested Citation

  • Giuliano Bianchi & Yong Chen, 2024. "The legal aspects of hotel rate parity," Tourism Economics, , vol. 30(5), pages 1324-1329, August.
    • Handle: RePEc:sae:toueco:v:30:y:2024:i:5:p:1324-1329
    DOI: 10.1177/13548166231190142
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    References listed on IDEAS

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    1. Benjamin Edelman & Julian Wright, 2015. "Price Coherence and Excessive Intermediation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(3), pages 1283-1328.
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