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The UK’s competition authority is examining three of the largest hotel companies globally for exchanging data that might have been utilized to align pricing strategies.

The owner of Hilton, Marriott, and Holiday Inn, InterContinental Hotels Group (IHG), is under investigation by the Competition and Markets Authority (CMA) to determine if they exchanged confidential data via an analytical platform.

The system, called STR, monitors hotel occupancy, average room prices, and income from 94,000 locations worldwide.

A US-based analytics company, CoStar, which operates STR, is also being probed.

The CMA stated, “no assumptions should be made regarding whether the law has been violated.”

However, when competitors exchange business information through these methods, it may enable them to anticipate each other’s actions more readily.

This weakens competition as it decreases the ‘uncertainty that competing companies typically face regarding each other’s actions,’ allowing them to ‘align their behavior’ according to what others might do.

The CMA’s inquiry is part of its effort to guarantee that emerging technology, like price-setting algorithms, does not undermine fair competition.

A price-setting algorithm is a mechanism that determines or suggests pricing strategies and typically relies on historical and present market information.

The CMA stated: “Businesses employ a range of data analysis tools and algorithms to assist in making commercial choices.”

This may offer advantages such as heightened competition, reduced expenses, and quicker adjustments in prices to more accurately align with market demand and supply.

Nevertheless, if competing companies exchange information that is crucial for competition – such as via a third-party data analysis service – it diminishes the uncertainty that businesses typically face regarding each other’s actions.

IHG, listed on the FTSE 100 and based in Windsor, experienced a 5% drop in its stock price during Monday morning.

However, the stock was also impacted by the conflict in Iran, which has undermined confidence in tourism across the Middle East.

An IHG representative stated that the company would “co-operate completely with the CMA’s investigations,” while CoStar mentioned that the firm was “willing to offer the CMA support.”

CoStar stated: ‘We are taken aback by the CMA’s attention towards a hotel data analytics and comparison platform that has been in use for many years by both businesses and governmental organizations to enhance their understanding of market trends.’

Hilton and Marriott have been contacted for a response.

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