Competition Law in Tourism

38 COMPETITION LAW IN TOURISM for instance, 4-star hotels only, 5-star hotels only, etc., as well as broader sub- -segments of the total market including hotels with successive star ratings, such as 4- and 5-star hotels combined, 3- and 4-star hotels combined, 2-, 3- and 4-star combined and so on76. However, the Commission later pointed out that the various national/regional classification systems use diverse criteria, and such star-ratings may not always provide equivalent comparisons between hotels located in different geographic areas. Further, nowadays customers rely more on users’ ratings for their hotel selection77. Alternatively, the hotel accommodation services may be segmented by category, whereby chain and independent hotels are distinguished into up to six different categories (classes or scales), based on their actual average room rates. In the case of chain hotels, the classification is done regarding the brand, on a global chain-wide level, namely all hotels belonging to a specific brand are classified in the same category, even if there is some degree of differentiation in the services they provide. However, even if hotel chains use this type of classification, customers are not familiar with it and rely instead on the hotels’ star-rating, which is widely communicated in all distribution channels78. Hotel management services could be defined as operating a hotel for a third- -party owner, typically in return for fees and/or a share of revenues. Nonetheless, the Commission noted that further assessment was needed to determine whether hotel owners regard the following hotel management services as interchangeable or substitutable: (i) services provided by hotel chains and white label management companies and (ii) services provided for the management of hotels belonging to different star ratings or categories/classes. In the case of the former, the market definition was left open, while the latter was rejected by the Commission79. Hotel franchising services may be defined as the issuing, by a company (the “franchisor”), of a contract authorising an unrelated company (the “franchisee”) to use a specific name and logo, purchased for an annual fee plus “royalties”, usually based on a percentage of sales. The Commission, in its prior decision, considered a market for hotel franchising services, leaving the exact market 76 Case M.7902 – Bank of Scotland / Barclays Bank / Kew Green Hotels, recitals 24 and following, Case M.4816 – Blackstone / Hilton, recitals 27 and following; Case M.2297 – Accor / Ebertz / Dorint, recital 12. However, in its previous cases the Commission has ultimately left open the market definition. 77 Case M.7902 Marriott/Starwood, paras. 57-58. 78 Case M.7902 Marriott/Starwood, paras. 61-62. 79 Case M.7902 Marriott/Starwood, paras. 76-92.

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