The Competition and Markets Authority (CMA) has recently consulted on draft guidance concerning price transparency. The consultation has now closed and we are waiting for the final version of the guidance to be published. However, the draft already signals the CMA’s thinking – and travel businesses should take note.
The core principle
At the heart of the CMA’s draft guidance is a simple proposition: when businesses advertise a holiday, flight, cruise, or indeed any consumer product, the price shown must reflect what consumers think it means. Prices should be clear, comprehensive, and free from hidden surprises.
Practices that will be banned
The guidance makes two particular practices unlawful:
- Drip pricing – beginning with a low headline price and adding unavoidable charges step by step as the consumer moves through the booking process. Rather, travel businesses must ensure that whenever they display a price to the customer, that price must be the total price which is payable by the customer and inclusive of all unavoidable and mandatory charges – including booking fees, taxes and other resort charges.
- Partitioned pricing – displaying individual charges separately but failing to present the full total upfront.
Both practices are now prohibited unless it is genuinely impossible to calculate the total price in advance.
Practical implications for travel businesses
Although the CMA’s guidance is not yet final, the draft makes clear how these rules are likely to be applied in practice.
- Package pricing: If a package holiday is advertised at £799, that must be the true price for the advertised holiday – inclusive of taxes, unavoidable booking fees and resort charges. A headline figure that omits any charge which the customer will have to pay (or lists them separately) risks being unlawful.
- Local charges: Resort fees, tourist taxes and similar local levies must be factored into the advertised total price, using a reasonable exchange rate.
- Checkout details: consumers must see both the overall price and a breakdown showing what is payable when, and the exchange rate, before submitting their order (e.g. on the website checkout page).
Why this is a priority for the CMA
The CMA views transparent pricing as central to consumer trust and effective competition. If advertised prices do not reflect the true cost, consumers cannot make meaningful comparisons. This not only harms consumers but also disadvantages businesses that comply with the law.
The CMA acknowledges that in rare circumstances it is not possible to give a final price upfront – for example, where the cost depends on variable elements – although it appears to be doubtful that this will ever be the case for travel, where it believes that resort fees are likely to be calculable. In such cases, the business must provide a clear and prominent explanation of how the total will be calculated, so that the consumer can still understand the likely overall cost.
The compliance challenge
For travel businesses, the compliance burden is practical as much as legal. Websites, booking flows and advertising materials must all be reviewed to ensure that the first price shown to the consumer is the genuine total price. This requires coordination between marketing, IT, finance and legal teams to ensure that pricing information is both accurate and consistently presented.
Failure to comply carries obvious risks. Once finalised, the CMA’s guidance will underpin its enforcement work. The CMA has made clear that non-transparent pricing is a priority area, and its new fining powers significantly raise the stakes for businesses that fall short.
Key takeaway
While the CMA’s guidance is not yet final, the direction is clear:
- ensure that the first price a consumer sees is the total price, inclusive of compulsory charges;
- incorporate local taxes and fees into headline pricing;
- only use “from” pricing where it reflects genuine availability; and
- provide clear explanations where advance calculation of a total is impossible.
The CMA’s likely message is simple: first price, true price. For the travel industry, the challenge is to ensure that this principle is embedded into advertising and booking processes before the final guidance comes into force.
