Drip-pricing in hotels - could you be breaking the law?

Travel Market Life

In this episode, we deep dive into drip-pricing the practice when a headline price is initially shown to travellers when they are browsing online, where additional elements of the price being added or ‘dripped’ as they move through the checkout process.
Richard Collie, Managing Associate for TLT LLP a consumer law expert at award-winning law firm with particular specialism in the leisure industry, including advising on consumer regulatory matters looking at investigations brought by the Competition and Markets Authority.

We look at

• What is drip-pricing
• Examples of how it is used in travel and hospitality industry
• Why drip-pricing is an issue for consumers and businesses
• What the UK government is planning to do
• The risks for businesses if this policy comes in

For further reading check out:
The UK government has made it clear that it wants to stamp out the most harmful forms of ‘drip pricing’. On 24 January 2024 it announced that it would bring forward new legislation banning hidden fees. The policy justification behind the new rules are as follows:

• Drip pricing undermines price transparency and make it difficult for consumers to make informed purchasing decisions based on the price of a product or service and
• It also limits price competition because businesses often compete on misleading headline prices rather than the price which consumers must pay in practice.

https://www.bbc.co.uk/news/business-68075851

https://news.sky.com/story/drip-pricing-three-psychological-reasons-we-fall-for-the-technique-and-how-to-resist-the-it-12959042

https://www.thesun.co.uk/travel/25491349/hotel-costs-drip-pricing-extra-fees-charges-holiday/#:~:text=HOTELS%20have%20been%20accused%20of,the%20overall%20price%20actually%20is.

https://www.morningadvertiser.co.uk/Article/2024/01/25/Hospitality-sector-welcomes-legislation-to-ban-drip-pricing

https://travelweekly.co.uk/news/air/government-confirms-plans-to-tackle-drip-pricing

Note that DBT also commissioned a detailed report estimating the prevalence and impact of online drip pricing in certain sectors – including hospitality and travel.

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Chapters

1. Drip-pricing in hotels - could you be breaking the law? (00:00:00)

2. Drip Pricing Definition (00:01:29)

3. Impact on Competition (00:04:11)

4. Government Regulation (00:06:56)

5. Pricing Strategies (00:12:48)

6. Psychology of Pricing (00:14:32)