ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Business trends

Japan travel site probe hints at hidden costs of convenience

Pressure on, Expedia and Rakuten trickles down to travelers

Accused of strong-arming hotels,, Expedia and Rakuten face their own pressure from rate aggregators.

TOKYO -- Japanese antitrust authorities probing travel websites, Expedia and Rakuten Travel have shone a light on an industry caught in a vicious cycle, with hotels and ultimately consumers paying the price.

The Fair Trade Commission is looking into the business practices of the three operators, alleging that they force unfair contract terms on hotels in violation of Japan's anti-monopoly law. The watchdog thinks the reservation websites themselves are feeling the heat from so-called metasearch engines, or aggregators, which compile room rates across multiple sites and display them for users in one place.

"It is possible that the [reservation] sites have stepped up demands on hotels as they felt threatened by the fact that metasearch engines have made it easier for consumers to find the cheapest booking site," an executive of the commission said.

Expedia, based in the U.S., and, which operates out of the Netherlands, are mainly used by non-Japanese travelers, while Rakuten as well as are preferred by Japanese, according to industry insiders. Collectively, these sites have become the go-to options for business and leisure travelers by allowing easy comparisons of hotels, which sign contracts with them because of their high user volumes.

But the reservation sites, too, are getting the comparison treatment through aggregators like TripAdvisor and Travelko.

Regulators' concern is that practices that appear to benefit consumers, by helping them find the lowest rates, are actually propping up prices.

This spring, a hotel operator in the region around Tokyo received an email from Rakuten Travel: "Your prices may be different from other companies' sites. Please confirm the settings and make corrections." The message pointed to rates on Rakuten's rival, Jalan.

The hotel operator started receiving such messages a few years ago. They came titled "Request based on contract terms (minimum/equal price guarantee)" and noted that the company's contract "may be changed if the situation is not improved."

An executive of the hotel complained about the restrictions on pricing. "We cannot even feature discount plans on our website, which doesn't cost us fees. We don't want them to terminate the contract, so all we can do is comply with their demands."

Investigators -- who raided the offices of, Expedia and Rakuten Travel on April 10 -- have zeroed in on what are known as "most favored nation" clauses in contracts with hotels. These oblige the hotels to give a platform a better or equal price compared with rival sites.

If a hotel wants to lower room rates on its own website, or for a minor booking site that charges a cheaper commission, the MFN clause forces it to offer the major players the same price. As a result, hotels are reluctant to reduce prices on one platform, fearing they will have to slash them for others.

This may inhibit competition between hotels, keeping prices higher than they would be in a more competitive environment. It also makes it harder for smaller websites to battle the big players by offering better deals.

"At first glance, the MFN clause may appear to drive prices lower, but in actuality, it puts consumers at a disadvantage," a senior commission official said.

Even so, the reservation sites have become entrenched, and the market "is expected to grow further," according to an officer in the Ministry of Economy, Trade and Industry's information economy division.

Japan's market for online travel services, including airline and railway ticket bookings, came to 3.71 trillion yen ($34.2 billion) in 2018, according to trade ministry data. Ten years earlier, it was worth 832 billion yen, even factoring in restaurant bookings.

"Booking sites have been well-received by consumers due to their convenience, and they have become important tools for hotels to attract customers," said Kazuo Takahashi, a professor in the Department of Commerce at Kindai University in Osaka.

A 53-year-old Tokyo resident said he uses Rakuten Travel to find rooms for business trips a few times a month. "I had to call numerous hotels to book rooms 20 years ago," he said. "But hotel booking sites are very efficient, as I can check on availability with just a few clicks."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more