Who: Booking.com B.V. (Booking.com), Publieke Innovatie B.V. (Hotelstars) and the Dutch Advertising Code Committee (ACC)
Where: The Netherlands
When: 6 December 2018
Law stated as at: 31 January 2019
Hotelstars is the sole official hotel rating company in the Netherlands, commissioned by the Dutch trade association for the hotel and catering industry. Booking.com rated fourteen hotels on its website with its own star rating.
Hotelstars filed a complaint with the ACC, about the unofficial star ratings applied by Booking.com. According to Hotelstars, the star ratings applied by Booking.com mislead consumers as they do not represent an official and objective quality or control mark.
Booking.com stated the following arguments in its defence:
- Hotelstars is misusing the ACC’s complaints procedure. Booking.com argued that Hotelstars was trying to secure a monopoly on distributing star ratings to hotels. Considering the star rating is a voluntary system, Booking.com argued that hotels should be free to use any classifying system, including star ratings.
- Booking.com is merely a facilitator and relies on the information provided by the hotels. The hotels are responsible for updating the room rates, the room availability and all of the other information shown on Booking.com’s website. The hotels have guaranteed to Booking.com that the information provided is accurate and not misleading.
- After Booking.com informed the hotels involved of Hotelstar’s complaint, some hotels indicated they were in the process of obtaining an official rating from Hotelstars. Other hotels were of the opinion that a rating from Hotelstars was not obligatory and that they had the right to use the star rating as shown on Booking.com.
The ACC’s ruling
According to the ACC, Booking.com was (jointly) responsible for the hotel information shown on its website, since its activities involve more than simply passing on information from the hotels to its users (for instance by providing a review system for its users).
In assessing the case, the ACC found the following elements relevant:
- the stars are placed directly behind the hotel name, without explanation;
- this design impacts the consumer’s decision making (i.e. a higher star ranking will be associated with higher quality in the mind of a consumer);
- a consumer can filter the search enquiry by selecting the star ranking of a hotel; and
- the average consumer will expect that the stars are awarded according to objective criteria, and not by the hotels themselves.
The ACC ruled in favour of Hotelstars. The use of the star rating by Booking.com to classify hotels on its platform violated article 7 in conjunction with article 8.2(f) of the Dutch Advertising Code. The ACC considered this specific advertising to be “misleading and unfair” and recommended that Booking.com refrain from such advertising in the future.
Why this matters:
The ACC assumed that the hotels involved could award their own star rating on Booking.com and Booking.com appeared to not contest this. Therefore, it is unclear if the star ratings shown on the site were awarded by an independent organisation or set by the hotels. If the stars were awarded by an independent organisation, this may have impacted the ACC’s ruling.
The ACC’s recommendation to refrain from advertising star ratings in the same manner is relatively minor. However, the case is interesting because there is no Dutch law that prohibits platforms from using a rating system that is not the state monopoly. As long as the platform clarifies what objective criteria it applies for its rating, it is free to use a system other than the one used by Hotelstars. Under Dutch law, the most important legal element to take into account when providing (product) information online, is that the information provided is not misleading to the consumer. Therefore, Booking.com can rectify the issue and potentially continue to use its own rating system but providing an explanation of the star rating as used on its website and note that this does not necessarily correspond with any official, national classifications.
The ruling also serves as a reminder of the importance of ensuring that all advertising is accurate. In particular, it is important for any business offering goods and services to consumers in different jurisdictions to ensure that any local practices are complied with and when this is not possible, clarification information should be provided.