2 days ago
Cartel Suspicion: Hotel Industry Practices Inviting Distrust
With the increase in inbound visitors and domestic travelers, the price of hotel rooms has been skyrocketing. The hotel industry needs to reform its opaque practices to avoid suspicions of unfair price hikes.
The Japan Fair Trade Commission has issued warnings to 15 operators of hotels in Tokyo, urging them to prevent a recurrence of the practice of exchanging information on such matters as room rates, saying it could possibly constitute an 'unreasonable restraint of trade,' violating the Antimonopoly Law.
Companies that were the target of the warnings included the operators of well-known hotels such as the Imperial Hotel, Tokyo and The Okura Tokyo. Representatives from each company reportedly held monthly meetings to exchange internal information such as room occupancy rates, average prices, reservations and pricing plans.
The commission ultimately concluded that it could not confirm any price gouging practices, but it said some hotels explained during the investigation that they had used information from other companies as a reference for setting room rates.
Such information exchange within the hotel industry could be construed by consumers as contributing to the rise in accommodation prices. This practice is said to have been going on for decades. The companies should take the JFTC's warning seriously.
It must be said that the underlying issue is the collusive nature of the hotel industry. When deciding rates and services, it is said to be important to accurately predict demand. Similar meetings have reportedly been held among business hotels and hotels in regional areas as well.
The commission has also issued requests to business associations to which those hotels belong, asking them to tell their members to be compliant with laws. It is important for the industry as a whole to strive to improve its behavior.
Exchanging information between companies is not always problematic. Exchanging information on market trends and customer preferences to improve services is likely important.
However, when information exchange between companies leads to price fixing, it can constitute a cartel. In such cases, consumers are forced to pay higher prices than the level set by price competition.
Hotel room rates have been rising steadily. According to a private research firm, the average price of a room last year was ¥16,289, and there is data showing that it has increased by 40% from the level immediately before the COVID-19 pandemic.
While there are inevitable factors such as rising labor and utility costs, many people still feel that accommodation prices are too high. It is important to avoid giving the impression that prices are being tacitly adjusted within the industry.
In the industry, an increasing number of hotels are using artificial intelligence to predict future demand and set accommodation prices. It is hoped that the industry will move away from obsolete business practices and strive for fairly improving services.
(From The Yomiuri Shimbun, June 10, 2025)
