New York, NY – May 7, 2009 – The National Advertising Division of the Council of Better Business Bureaus has recommended that Expedia, Inc. modify or discontinue certain advertising claims made to promote Website sale prices on certain hotels.

NAD, the advertising industry’s self-regulatory forum, examined broadcast and Internet advertising, following a challenge by Priceline.com.  Specifically, the challenger took issue with the advertiser’s promotion of “half off hotels sale” and savings claims of “up to 50%” on hotel bookings in its September 2008 “Hotel Sale” and October 2008 “Beach and City Sale”. Claims at issue included:

• “Half off hotels sale”
• “Up to 50% OFF HOTELS”
• “Our best hotel deals are here. It’s the Expedia Half-Off Hotels Sale”
• “Right now you can save up to 50% on participating hotels for business or fun”

The challenged television commercial for the September “Half-off Hotels Sale”, featured a business woman at a conference table, apparently in a meeting. An animated yellow suitcase appears in the woman’s peripheral vision and catches her attention.  The suitcase is labeled on one side with the words, “Expedia” and the Expedia logo, and on the other side, with the claim, “up to 50% off hotels.” 

A voice states “our best hotel deals are here.  It’s the Expedia Half-off Hotels Sale,” as a line of text repeating the message appeared onscreen. The voiceover continued, “Right now you can save up to 50% on participating hotels for business or fun.” Bold text again appeared on screen, stating, “up to 50% OFF participating HOTELS.” A super appeared underneath, stating” Savings based on Expedia everyday rates.  Available only at participating hotels.  Book 4+ night stay by 9/30/08 travel by 10/30/08.  See site for details.”

NAD has held that to support an “up to” savings claim, an advertiser must offer at least 10% of the inventory included in the offer at the maximum advertised savings. Following its review of the evidence in the record, NAD determined that Expedia met that requirement, with more than  10% of its sale inventory offered at savings of up to 50%. However, NAD cautioned that because prices of online hotel bookings constantly fluctuate, the advertiser should take great care to monitor its transactions and published rates on an ongoing basis to ensure the accuracy of its “up to” savings claim.

NAD noted that “[t]he unqualified term ‘sale’ may be used in advertising only if there is a significant reduction from the advertiser’s usual and customary price of merchandise offered and the sale is for a limited period of time. If the sale exceeds thirty days advertisers should be prepared to substantiate that the offering is indeed a valid reduction and has not become their regular price.”

In this case, NAD determined that the September and October sales were separate and distinct offers, with separate and distinct parameters: The September sale was focused solely on hotel bookings with a minimum four-night stay, while the October was conditioned upon a four-night hotel stay and online booking of airfare.

NAD was concerned, however, about the disclosures that defined the parameters of each offer. NAD determined that the disclosure in the challenged commercials, which appeared in a small, faint typeface, was not sufficient to provide consumers with material information. NAD observed that the limitations could be clearly read only if the commercial was taped and paused when the super appears on the screen. NAD further noted that consumers would not typically do so “in the normal course of watching a commercial and should not have to in order to receive material information.” NAD recommended that the disclosure in its commercials be modified, at the very least, so as to be legible and on screen for a sufficient amount of time as to be readable and understandable to the viewer. 

Further, NAD determined that the phrase “participating hotels” was insufficient to apprise consumers of the limited nature of the sale and suggested that the advertiser modify this phrase to avoid  the potential for confusion or overstatement as to the number or types of hotels that are included in the advertiser’s promotion and to more adequately characterize the scope of the number of hotels from which the consumer will receive the advertised savings.

NAD found that an audio disclosure represented the best means of providing the necessary information in the advertising at issue. Regardless of how the advertiser executed the disclosure, NAD said, it must meet the standard of “clear and conspicuous.”  

Finally, NAD addressed the “Half-Off Hotels” Sale commercial depicting a business woman at a meeting. NAD recommended that the challenged “Half-Off Hotels” Sale commercial (or similar future offers conditioned on a four-night stay and limited travel dates at select hotels) be modified to limit this promotion to business plus leisure travel or leisure travel alone.  At the same time, however, nothing in NAD’s decision precludes the advertiser from depicting an office worker or executive in a meeting, dreaming about a vacation getaway.

Expedia, in its advertiser’s statement, said that although “the challenged commercials have been discontinued, Expedia will take NAD’s recommendations for modifying certain of the disclosures and limiting certain sale claims to leisure or business plus leisure travel into consideration in future advertising.  Expedia appreciates NAD’s thoughtful analysis and thanks NAD for its careful consideration of this matter.”