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The Federal Trade Commission is preparing potential enforcement action involving Booking Holdings’ Priceline and a business-to-business affiliate, over online hotel advertisements that may lead consumers to believe they are booking directly with a hotel, according to Reuters, citing two people familiar with the matter. The affiliate identified in the report is Guest Reservations, whose sites advertise rooms at specific hotels and may charge higher prices and additional fees, the sources said.
The case could involve more than $500 million in potential penalties, one source told Reuters. That figure is a reported potential exposure, not a penalty imposed or a final amount determined by the FTC. The agency is considering whether the websites violate a rule against impersonating other businesses, as well as possible violations involving fee disclosures, according to the report.
Booking Holdings disclosed in a June-quarter filing that FTC staff had told Priceline in July they planned to recommend that the commission file a complaint against Priceline and an unnamed business-to-business affiliate. The company said it disagreed with the FTC’s position and was discussing a resolution with the agency. An FTC spokesperson confirmed an investigation to Reuters but declined further comment; Priceline declined to comment, and Guest Reservations did not immediately respond to Reuters.
What the FTC is examining
The investigation centers on the path consumers take from an online advertisement to a hotel reservation. Reuters reported that ads may appear to direct a traveler to a hotel’s own website but instead send the person to a third-party booking site. Consumers may then encounter a different seller, a higher room price or additional fees than they expected.
The FTC is considering whether Guest Reservations’ websites impersonate other businesses and whether other practices related to fees breach consumer-protection requirements, according to Reuters’ sources. Those are allegations and questions under investigation, not findings by the commission. Guest Reservations’ website says it uses hotel names or other hotel information to help customers book rooms, Reuters reported.
The FTC’s potential complaint follows staff’s July notice that they intended to recommend action over disclosures, fees, customer support and billing practices. The company’s filing does not name Guest Reservations, and Reuters’ report does not establish that the FTC has formally approved a complaint or filed one in court.
Booking Holdings disclosed the inquiry
In its filing for the six months ended June 30, Booking Holdings said FTC staff had informed Priceline of their intention to recommend that the agency file a complaint against Priceline and a business-to-business affiliate partner. The filing said the matter concerned alleged unfair or deceptive business practices involving disclosures, fees, customer support and billing.
Booking Holdings warned that the investigation or possible litigation could lead to commitments to change business practices, damages or penalties, potentially affecting the company’s business, results and reputation. It did not quantify an expected cost in the filing, and Reuters’ reported figure above $500 million came from one source familiar with the matter.
Booking Holdings operates Priceline alongside other travel brands. The connection matters to the company because the regulatory inquiry concerns conduct attributed to Priceline and an affiliate, while the company itself disclosed potential financial and reputational consequences. Booking Holdings reported net profit of $5.4 billion last year, Reuters reported; that figure is not an estimate of the effect of any FTC action.
Consumer complaints and hotel industry concerns
Reuters reported that Guest Reservations had received more than 1,000 consumer complaints to the Better Business Bureau. Many complainants said they believed they were booking directly with hotels and described surprise fees or difficulty reaching customer service, according to the report. The complaints are not, by themselves, a legal determination about the company’s practices.
Reuters also reported that Booking supplies hotel inventory to Guest Reservations through Priceline Partner Solutions, citing an ongoing lawsuit brought by San Francisco against the companies. A spokesperson for the American Hotel and Lodging Association told Reuters that third-party booking sites that confuse customers through misleading affiliation claims, prices or inventory have been a persistent problem.
Hotel operators have an interest in direct bookings because intermediaries can involve commissions and transaction fees, while online travel agencies remain important sources of customers for major hotel chains, Reuters reported. The Asian American Hotel Owners Association’s chief executive told Reuters that hotel staff may have to handle guest complaints when third-party reservations go wrong. Hilton, Marriott and InterContinental Hotels Group declined to comment, and Hyatt did not respond to Reuters’ request.
FTC scrutiny extends to misleading online ads
FTC Chairman Andrew Ferguson told Reuters in September that the agency was investigating misleading advertising, including ads that lead consumers to websites appearing to be operated by hotels. He said some travelers may not recognize the problem until after checkout and the payment of fees, according to the report.
Reuters also reported that the FTC has raised concerns about deceptive third-party hotel sites using Google advertising tools to appear above hotel websites. The agency has questioned whether platforms should do more to address misleading ads, the report said. The Booking matter is therefore part of broader scrutiny of how online advertising and booking pathways identify the seller and communicate the total cost.
Next steps remain uncertain
The immediate next step is not settled publicly. Booking Holdings said it remained in discussions with the FTC, while the agency has not announced a complaint or a resolution. The company’s filing says it disagrees with the FTC’s position, leaving open whether the discussions will result in a negotiated agreement or formal litigation.
The reported potential penalties, any required changes to disclosures or billing, and the timing of a final decision remain uncertain. Until the FTC announces its next action or Booking Holdings provides a further update, the matter remains an investigation with the possibility of a recommended complaint rather than a resolved enforcement case.
