tl;dr – The investigation will focus on whether hotel chains share sensitive information via a common data aggregator.
The UK’s Competition and Markets Authority (CMA) announced “an investigation into suspected sharing of competitively sensitive information among competing hotel chains – Hilton, IHG Hotels and Marriott – using the hotel data analytics tool STR, owned by CoStar.”
The four businesses under investigation are CoStar, Marriott, Hilton, and IHG. IHG, based in the UK, posted a brief update about the investigation on its website. Thus far, Marriott and Hilton have not made comments.
Hotels utilize CoStar’s data analytics tools and algorithms to inform various business decisions, including (but not limited to) pricing, demand and supply, and cost control.
As the press release indicates, “when rival businesses share competitively sensitive information – including through a third-party data analytics provider – this reduces the uncertainty competing businesses normally have about how each other will act. This can affect how strongly companies compete because it makes it easier for them to predict what each other will do and coordinate their behaviour.”
The specific legislation at play here is the Competition Act 1998. The CMA provides businesses with guidelines as to how they can properly incorporate algorithms into their practices. Notably, “information is considered to be ‘competitively sensitive’ when it reduces competitive uncertainty in the market and is capable of influencing the competitive strategy of other businesses.”
You can stay abreast of updates to this investigation here.
