ASA Adjudication on Hotels4u.com Ltd
The Thomas Cook Business Park
25 April 2012
E-mail, Internet (sales promotion), Internet (social networking)
Holidays and travel
Number of complaints:
An e-mail, claims on a website and ads on Facebook and Twitter for a Christmas Day sales promotion for a hotel booking service, seen in December 2011:
a. The e-mail stated, "Reminder about your £50 gift ... Remember that if you book with us on Christmas Day and [sic] you'll get £50 off your booking when you spend over £50. Simply click here for the £50 voucher to apply. This discount is valid for bookings made on 25th December 2011 on any hotel and there are no restrictions on dates. Only one £50 voucher to be used per customer ...". Small print stated "*The £50 voucher will automatically apply on Christmas Day when you click on the above link in this email. Alternatively click here for the voucher to apply. Terms and Conditions of the £50 voucher: 1. The £50 voucher applies to bookings made on Christmas Day only (25th December - 00:00 - 23:59 GMT) where the booking value is over £50. 2. The voucher is valid on any hotel and there are no restrictions on dates of stay. 3. Customers must spend over £50 to redeem the voucher. Only one voucher can be used per booking. 4. Only one voucher can be used per customer ... 5. Voucher can only be used and bookings made by those who are aged 18 or over ...".
b. Claims on the website stated, "£50 off your booking on Christmas Day. Your £50 will automatically activate on Christmas Day. Please follow the below steps to get £50 off your booking. 1) Take a look around our website at the fantastic deals we have on beach, city and ski hotels. 2) Come back on Christmas Day through the link that you were given for the £50 voucher to apply. 3) Your £50 voucher will automatically apply to your booking if your booking total is over £50. For example, if your booking total was £1000, with your £50 voucher you will pay £950 ... 4) Make your booking ...". A section entitled "Terms and Conditions" had the same conditions as featured in ad (a).
c. The Facebook ad stated, "**REMINDER** Book with us on Christmas Day and you'll get £50 off your booking when you spend over £50! Just a little thank you from the entire Hotels4u team for being our fans ...". The ad then provided a link to the Hotels4u website.
d. The Twitter ad stated, "*1 DAY DEAL* Book on #Xmas Day 4 £50 off your booking when you spend over £50! Just a little thanks [sic] you from Hotels4u". The ad provided a link to the Hotels4u website.
Nineteen complainants, who had attempted to redeem the offer but found that it had been withdrawn before the closing time, challenged whether the promotion had been administered fairly.
CAP Code (Edition 12)
Hotels4u.com Ltd (Hotels4u) explained that the aim of the promotion was to stimulate demand on what was traditionally a low booking day, Christmas Day. They said that on Christmas Day in 2010 just 57 bookings were made, whereas the average number of bookings per day in December 2010 was 133. They had anticipated that the promotion would generate up to 10 times the usual number of bookings on Christmas Day, so up to 570. They had also assumed that the promotion would have stimulated a mix of low and high value bookings, with an average booking of around £500, and that this was required so as to not adversely affect their profitability. They said they had not operated a promotion of this type before and therefore had no experience to draw from. They believed that looking at the number of bookings taken on a previous Christmas Day and estimating that they might receive 10 times that number was not an unreasonable estimate where no other information existed on which to base the estimate.
Hotels4u explained that by 6.30am on the day of the promotion, more than 2,600 bookings had been made and this had generated a loss of over £120,000 due to the fact that 2,478 of these bookings had a sales value of lower than £10 after applying the £50 discount. At approximately 7am Hotels4u suspended the promotion to investigate why so many bookings had been made so quickly and at such a significant loss. By 10am it was found that a significant number of customers had made duplicate bookings in breach of the terms and conditions of the promotion and Hotels4u also suspected some potentially fraudulent bookings had been made.
The promotion was reinstated at 11am but during the following hour a further 1,000 bookings were made. Hotels4u said this far exceeded a normal level of bookings and was much greater than they had anticipated based on past experience. They said they could not continue to operate the promotion for the remainder of the day in view of the level of booking activity, the number of duplicate or fraudulent bookings and the potential financial losses to the company, and they therefore closed the promotion early. Overall 660 duplicate bookings had been made and a large number of the 2,600 bookings made before 7.00am by individuals residing in the Far East had been flagged up as being potentially fraudulent. They did not believe it was viable to implement measures to prevent multiple bookings for the purposes of a one-day promotion, since the time and cost involved in altering the website booking system would have far outweighed any financial benefits gained from the promotion.
They believed they had done their best to administer the promotion fairly, and whilst they recognised that some customers were disappointed because they could not participate in the promotion, they pointed out that a total of 2,984 bookings were made during the promotion and that the total value of discounts offered to customers was £149,200. They said they had not intended to disappoint customers and they very much regretted having to curtail the promotion early, but believed they had no alternative under the circumstances.
They explained that approximately 500 customers had complained to them directly and they responded to each one explaining what had happened and in some cases, they had considered it appropriate to honour the discount. They said they believed approximately 30 customers had completed a booking without being aware that they had paid full price. Of these, Hotels4u honoured the discount for around 15 bookings as a gesture of goodwill, and in all other cases offered to cancel the booking and provide a full refund.
Hotels4u said they had learned many lessons from the promotion and considered it advisable in future promotions to introduce a minimum spend amount. They said they had been offering percentage discounts successfully since 2007 and had only begun using fixed price discounts in November 2011. They said they sincerely apologised to the complainants who had brought this matter to the attention of the ASA and very much regretted that they could not continue operating the promotion throughout the whole of Christmas Day.
The ASA noted that Hotels4u had estimated that approximately 570 bookings would be made during the promotion and that this was the first promotion they had run of this type. They had based this on the booking figure for the previous Christmas Day (57 bookings) and multiplied it by 10, whilst also taking into account that the average number of bookings per day in December 2010 was 133. We noted that the promotion had been advertised on Hotels4u.com, Twitter and Facebook. We also noted that the promotion was intended to run for the whole of Christmas Day and that by 6.30 am more than 2,600 bookings had been made, far exceeding the projected figure of 570 bookings and that by the time the promotion was closed, at around 11 am, the number of bookings was almost 3,000. We therefore considered that Hotels4u had not made a reasonable estimate of demand because they had based their projection on a seemingly arbitrary figure which was significantly lower than actual demand.
We also noted that the terms and conditions stated that the offer was limited to one booking per customer, although we noted that approximately 660 bookings were duplicates and therefore in breach of the terms and conditions. We also noted Hotel4u's comment that a large number of the bookings made by individuals in the Far East had been flagged up as being potentially fraudulent, although it was unclear whether or not they had been confirmed as being fraudulent. We considered that Hotels4u could have taken steps to put measures in place to prevent duplicate bookings, either at the start of the promotion or when they became aware of the problem, for example, they could have required customers to register an email address or they could have provided a unique booking code to consumers to ensure that only one booking could be made per customer. In any event, the number of bookings that were made in the period 12.01am to around 11.00am when the promotion closed far exceeded the estimated demand for the entire day, even when the duplicate bookings were discounted.
We considered that a number of duplicate or fraudulent bookings did not justify Hotels4u ending the promotion early although we sympathised with their argument regarding the potential financial losses to the company. We noted that approximately 500 customers had complained directly to Hotels4u and that these, as well as other customers who may not have complained, had experienced disappointment at the premature ending of the promotion as they had not been able to take up the offer. However, we also noted that approximately 2,984 customers, who had been able to take up the offer before the promotion was prematurely ended, had not been disadvantaged.
For these reasons, we concluded that the promotion had not been administered fairly.
The promotion breached CAP Code (Edition 12) rules 8.2 (Sales promotions), 8.9 and 8.12 (Availability), 8.14 (Administration), 8.17.4 and 8.17.8 (Significant conditions for promotions).
We told Hotels4u to take care to ensure future promotions are administered fairly and, in particular, to ensure they make a reasonable estimate of demand and do not end promotions prematurely unless under circumstances outside their reasonable control.