U.S. scrutiny urged for hotels' Net plan

The American Society of Travel Agents says the collaboration online by the top hotel chains raises antitrust concerns, though an analyst says the judgment is premature.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read
A new company formed by top hotel chains to link travel sites to room reservation systems should be closely scrutinized by the government, a travel agent industry group said.

The American Society of Travel Agents expressed concerns about plans the hoteliers announced Monday to launch the Hotel Distribution System (HDS).

"Any time major players get together it raises the specter of antitrust issues," ASTA Chief Executive Richard M. Copland said in a statement. "This joint venture has the potential to harness the vast power of the Internet for anti-competitive purposes.

"There has been no mention of how online travel agents might use the HDS technology platform or even if there are any plans to include them," said Copland, whose group has over 24,000 members.

The companies making up HDS are Hilton Hospitality, Hyatt, Marriott International, Six Continents Hotels and Starwood Hotels & Resorts Worldwide. HDS will aim to make hotel rooms available to Web travel sites via direct connections to hotel reservation systems.

The Dallas-based venture comes two years after six of the top airlines banded together to create Orbitz, a Web travel agency designed to compete against powerhouses Expedia and Travelocity. But the Web travel sites have declared that Orbitz was an airline ploy to fix prices and seize control of the distribution of airfare online. The Department of Justice is investigating Orbitz for any signs that its business practices are anti-competitive.

The online travel industry is one of the few profitable areas of e-commerce; competition has raged and players have vied for larger market share.

The collaboration online by the top hotel chains is among the first such efforts in the industry. The hotel chains now distribute rooms online via their own sites or through Web travel companies, such as Hotel Reservation Network or Expedia, which are reaping large returns from it.

But passing judgment on HDS is premature, says Forrester analyst Henry Harteveldt, who points out that there are important differences between Orbitz and HDS: The airline industry is controlled by relatively few carriers, and the hotel industry is populated by thousands of independent companies and small chains.

A group of hotel chains, even large ones, is not big enough to put a stranglehold on distribution, he said.

"Once again, ASTA has jumped the gun, but that's not surprising, because ASTA cries at weddings, funerals and competitive announcements," Harteveldt said. "Hotel pricing is so fragmented, and the hotel industry is so less concentrated and so much more competitive than the airline side...they don't want to bypass travel agencies."