Ad description
Two hotel booking websites, www.crowneplaza.com and www.ichotelsgroup.com, viewed on 20 March 2012, listed the prices for rooms in a London hotel. On both websites the price for each type of room was stated in bold black text. Underneath each price, text stated "(Excludes VAT)".
Issue
The complainant challenged whether the room prices were misleading, because they were not inclusive of VAT.
Response
Intercontinental Hotels Group plc t/a Crowne Plaza (IHG) said they would in principle be prepared to display the prices for their London IHG branded hotels as VAT-inclusive prices in the future, but they faced challenges in making such a change and would only do so if their competitors were also required to do so as part of a CAP sector compliance project.
IHG said that only a small proportion of IHG branded hotels were either owned or managed by IHG; the majority were owned by third parties and managed by various franchisees. They said they only had the direct ability to set room rates for those hotels which they managed. They said that, whilst they could direct their franchisees to display VAT-inclusive prices, the franchisees were ultimately in control of whether that process was followed or not. IHG said they therefore had to carefully liaise and consult with the owners and/or operators of those franchised IHG branded hotels that were displaying VAT-exclusive prices, which could take some time. They added that there were also technical challenges due to the different types of property management systems and software used by IHG branded hotels.
IHG said their website displayed VAT-exclusive prices for around half of their London hotels; the text "(Excludes VAT)" was clearly stated under the prices of rooms in those hotels so that the VAT-exclusive nature of the price was prominently highlighted to consumers as early as possible in the booking process. They believed that was a much more transparent process than that followed by many of their competitors who also displayed prices exclusive of VAT. They provided screenshots of the websites of many of their competitors to demonstrate the use of VAT-exclusive prices. IHG said it had been a long-standing and widespread industry practice for hotels in London to display VAT-exclusive prices, which was largely due to the global trend of displaying hotel prices exclusive of value-added and local taxes, and also because a high proportion of London hotel customers were from international destinations. They said that hotels displaying VAT-inclusive prices could therefore appear uncompetitive. They considered they would be at a significant disadvantage if they displayed VAT-inclusive prices when many of their competitors did not.
Assessment
Upheld
The ASA understood IHG faced technical challenges in ensuring that all UK hotel room prices were advertised inclusive of VAT, as well as challenges relating to liaison with their franchisees. We also understood that many hotels in London displayed their prices exclusive of VAT. However, we noted the CAP Code clearly stated that VAT-exclusive prices may be given only if all to whom the price claim was addressed paid no VAT or could recover VAT. Because we understood that IHG's websites were likely to be viewed by consumers who must pay VAT, we concluded that it was misleading and a breach of the Code to display prices which were VAT-exclusive.
The ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. 3.4.3 3.4.3 the price of the advertised product, including taxes, or, if the nature of the product is such that the price cannot be calculated in advance, the manner in which the price is calculated (Misleading advertising) and 3.18 3.18 Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable. (Prices).
Action
The ads must not appear again in their current form. We told IHG to ensure that all prices for rooms in their UK hotels were advertised inclusive of VAT unless all to whom the price claim was addressed paid no VAT or could recover VAT.
