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The startup that’s ruffling the feathers of Booking.com

A startup which has been threatened with legal action by hotel price comparison site Booking.com has branded the website's behavior towards hotels as "threatening" and accused them of "overstepping the mark".

British startup Triptease provides a tool for hotel websites that allows the hotel to show consumers its own price if they book directly with them versus the prices on comparison sites like Booking.com, Expedia, or Hotels.com. The aim, according to co-founder Charlie Osmond, is to boost the number of people booking directly through hotel websites.

"When consumers see the prices on hotel sites, 20 to 30 percent more consumers will book on the hotel site, because people want that direct relationship and they know that the hotels prefer guests who book directly," Osmond told CNBC in a TV interview on Wednesday.

But its tool has put them at loggerheads with Booking.com as often, Triptease will show that the price for booking via a hotel's website is cheaper than a price comparison website.

As a result, Booking.com has threatened legal action against the startup.

A letter has been leaked online, which Booking.com allegedly sent to hotels that use its website, but also use Triptease's tool.

"We believe that TripTease is unlawfully accessing Booking.com's data in order to collate the Booking.com information shown by the widget. Moreover, we wanted to make you aware that the Booking.com price and availability information shown by the widget is often misleading, inaccurate and misrepresents the prices and availability being offered for rooms at your hotel on Booking.com," the letter alleged.

"If you are providing us with the correct prices, it may be that the widget is simply not capable of making the correct price comparison and is therefore failing to show an accurate price for the comparable reservation with Booking.com. Nevertheless, by displaying any such inaccurate prices on your website, you are engaging in the misleading comparative advertising practices referred to above."


Online travel
Tom Nulens | E+ | Getty Images

The price comparison site appeared to give hotels until November 27 to remove Triptease's widget from their site.

When CNBC asked Booking.com to confirm that this letter was in fact sent by them, the company said in an email: "The question to whom the letter was sent is confidential. The key issue however is that the widget displayed inaccurate and misleading prices which cause[d] substantial damage to our brand and reputation."

But Osmond hit back at Booking.com, accusing them of aggressive practices.

"In that sort of race for quarterly profits, occasionally they are guilty of overstepping the mark and I think now that they are in a very dominant position…we're seeing quite threatening behavior towards some small hoteliers," the co-founder told CNBC, adding that the price comparison site is pushing some hotels into "unfair agreements".

Osmond also said he believes the behavior is "anticompetitive" and rebutted claims that Triptease is unlawfully accessing Booking.com's data.

Booking.com told CNBC in a separate statement: "At Booking.com, our customers access the absolute best prices, 100 percent verified customer reviews and content and information translated across 42 languages worldwide. We take data protection and accuracy of information extremely seriously. We will take action against any person, company or product that illegally accesses our data. We will also take action against any person, company or product that interferes with the accuracy of information related to the lowest prices we promise our customers because it will break the trust our guests have in the hotel brands and Booking.com."

Booking.com hit by German ruling

In a blow to Booking.com, the German federal cartel authority ruled that one of the company's contract stipulations is anticompetitive on Wednesday. The price comparison site introduced a so-called "best price clause" in Germany in which it allowed hotels to offer their rooms cheaper on other hotel booking portals but still said that the prices displayed on their own website should not be lower than on Booking.com. The German cartel office has prohibited Booking.com from continuing to apply the best price clause to hotels in the country.

Booking.com said in a statement that it plans to appeal the German authority's decision. noting that other national competition authorities in other European countries were satisfied with its clause.

"We believe this decision is flawed because it does not recognize the immense benefits that online travel brands like Booking.com bring to both consumers and accommodations," Gillian Tans, president of Booking.com, said in a statement.

"Narrow parity (the name of the clause) was put in place to ensure that consumers don't have to check hundreds of hotel websites in order to get the best price, allowing sites like Booking.com and others to achieve advertising efficiencies on behalf of hotels."

The price comparison site said it would co-operate with the German body in the interim and remove the offending clauses from its contract with hotels in the country.