In Separate Cases, NAD Recommends Travel Sites Modify, Discontinue Certain Claims

New York, NY – June 21, 2012 – The National Advertising Division, in separate challenges brought by Expedia and Booking.com, has recommended that “strike-through” pricing claims – where the original price of a one-night hotel stay is crossed out, but adjacent to the booking site’s sale price – require clear disclosures to assure consumers understand how original prices are calculated and whether there are limitations on the inventory of sale-price rooms.

NAD is an investigative arm of the advertising industry’s system of self-regulation, and administered by the Council of Better Business Bureaus.

Internet savings and pricing claims made by Amsterdam-based Booking.com B.V. were challenged by Expedia, Inc., which took issue with the following claims:

• “Up to 75% off hotels”
• “Save up to 75% on your reservation”
• Strike-through and related pricing claims

In a separate challenge, Booking.com questioned certain claims made by Expedia, including:

• “Save Up to 50%”
• “Book Now & Save up to 50% on Over 123,000 Hotels Worldwide!”
• “Expedia Special Rate”
• Strike-Through Pricing

(Full text of decisions available to media upon request)

As NAD has noted in previous decisions, an “up to” savings claim and a low-price or “from” claim are not the same.  While both claims are price-related in nature, the former advertises the percentage-off of a hotel price, while the latter advertises a specific starting price for either a particular hotel or a city.

NAD has determined that as a general rule, advertisers making “up to” percentage savings claims must be able to demonstrate that at least 10 percent of the rooms offered in each advertised city on its site are available at the highest savings.

Booking.com:  In its decision regarding Booking.com, NAD noted that the advertiser permanently and voluntarily discontinued unqualified “up to 75%” savings claims.

Concerning the strike-through claims, NAD noted that the advertiser’s basis for determining its strike-through prices (a comparison with the second-highest rate paid by another customer for a similar room within a period of 45 days before and 45 days after a user’s contemplated stay) could include a large fluctuation in prices and indicate a dramatic savings when in fact the savings would be more modest.

NAD recommended that – to improve the likelihood that its savings claims will be meaningful to consumers – Booking.com either substantially narrow the timeframe for its strike-through claim or otherwise ensure that its strike-though price reflects a rate at which an appreciable number of bookings have been made – not an “outlier” rate.

NAD further recommended that the advertiser include an explanation of how it arrives at the strike-through price clearly, conspicuously and in close proximity to the claim.

Finally, NAD determined that the advertiser’s changes to its U.S. website – designed to ensure that rooms are actually available at the “from” prices advertised and that the promoted rate is eliminated or modified when the inventory is exhausted – are sufficient to ensure the truthfulness and accuracy of its “from” price claims
Expedia:  In its decision regarding Expedia, NAD noted that the advertiser had made continued efforts to ensure that its “Save up to 50% claims” were permanently discontinued.

NAD recommended that the advertiser clearly explain to consumers what “Expedia Special Rate” means.

Concerning the strike-through claims, NAD acknowledged that the advertiser’s strike-through rate goes into effect only when Expedia has negotiated an additional discount for a limited period of time off its Expedia Special Rate and found that the strike-through rates do not communicate a greater savings than competing websites.

NAD recommended, however, that the advertiser clearly and conspicuously disclose that the strike-through rates and listed nightly rates on its Featured hotels page are applicable to the limited time period specified, are based on an average of the days listed, and may vary depending on the length of stay.

Concerning the city-specific hotel sale price claims, NAD recommended that the advertiser ensure that its city-specific hotel sale price claims are fully supported by the availability of sufficient inventory at the advertised low rate.

NAD acknowledged that inadvertent errors occur on online travel sites based on the sheer volume of hotels, but cautioned that advertisers must monitor their websites to ensure sufficient inventory and, upon learning of the insufficient availability, immediately modify or discontinue the claims.

Accordingly, NAD recommended Expedia clearly and conspicuously disclose where the inventory is highly limited, routinely monitor the availability of the advertised prices, and promptly modify or discontinue them when no longer available.

Booking.com, in its advertiser’s statement, said that although the company believes that NAD’s “concern regarding the time frame that we use is more theoretical than real, we support industry self-regulation and agree to take NAD’s recommendations into account when displaying cross out rates in the future.”

Expedia, in its advertiser’s statement, said that while the company “believes that the current disclosures adequately communicate the availability of its advertised rates, as strong supporters of the self regulatory process, it will take NAD’s recommendations into account when making these claims in the future.”