Partner Sydney
"This would constitute uncompetitive conduct if the CMA concludes that STR’s tool allowed the hotel chains to reduce competition between the hotels ‘because it makes it easier for them to predict what each other will do and coordinate their behaviour’."
STR has been collecting and anonymising hotel performance data for more than 25 years. This includes allowing hotels to track their performance against a comparable pool of hotels, known as the competitive set. STR has longstanding rules on data contribution to prevent hotel-specific data from being shared, including steps to stop subscribers from reverse engineering data to isolate to a particular property and to otherwise protect the integrity of the ‘average’ data they share.
The focus of the CMA’s investigation is whether, by providing real time data on occupancy, pricing and revenue trends to STR, the three hotel chains exchanged ‘competitively sensitive’ information, allowing the chains to align their strategies, particularly on hotel development, and pricing. This would constitute uncompetitive conduct if the CMA concludes that STR’s tool allowed the hotel chains to reduce competition between the hotels ‘because it makes it easier for them to predict what each other will do and coordinate their behaviour’.
CMA will require the three hotel chains and STR to disclose documents, records and other information on how the STR benchmarking tool operates to aggregate data from hotels in multiple markets. The CMA will investigate how STR collects and analyses this data, including ADR, RevPAR and occupancy rates. A key focus will be on the use of algorithms and how these algorithms interrogate this data to produce reports on which pricing decisions and other sales and marketing strategies are based and to anticipate and react to the pricing decisions and other sales and marketing strategies of competitors. The CMA investigation will assess whether the reports produced from this data constitute the sharing of ‘competitively sensitive’ information between the three hotel chains.
Why is this investigation significant?
The CMA investigation will review in depth the compatibility of data analytical tools in the travel sector but the investigation does not mean that these companies, CoStar or the three other global hotel chains which also use the STR tool and are not included in this investigation, have breached UK competition laws. Following its investigation, if the CMA concludes that there is a breach of UK competition it will issue an infringement decision and can impose fines on the companies involved.
What are the broader implications of this investigation for the hotel sector?
This CMA investigation highlights the challenges of assessing the impact on competition of data sharing particularly when using such an analytical tool managed by a third-party provider and the focus of the CMA on the use of new technologies in compliance with competition laws.
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"If the CMA investigation finds that STR was being misused to share ‘competitively sensitive’ information, this is likely to have an impact on the extent to which all such tools can be used."
Regulators, such as the CMA, are assessing the impact of the increasing sophistication of pricing algorithms and AI on competition and data integrity. This CMA investigation highlights and exemplifies regulator concerns about how pricing algorithms and AI can help companies predict and react to market trends, such as using ADR and RevPAR to predict and respond to pricing moves by competitors. The CMA investigation is aligned with similar investigations by its EU counterparts on the impact dynamic pricing tools on competition, with the travel sector (including airlines and train services) being a key target. The Netherlands’ Authority for Consumers and Markets (ACM) is investigating the use of computer-controlled consumer pricing in the Dutch airline market. For further details, please see this article.
The CMA’s information gathering phase is currently expected to conclude in August 2026. If the CMA investigation finds that STR was being misused to share ‘competitively sensitive’ information, this is likely to have an impact on the extent to which all such tools can be used, and the use of the same tool by a number of key players in a given market and this will include:
- hotel pricing policies and processes, which rely on such tools, will also need to be reviewed and updated to ensure that they do not breach competition laws; and
- smaller regional and domestic hotel operators, which use pricing algorithms as part of their revenue management activities, will need to critically review their practices and how relevant data and algorithms are used.
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