UPDATE: Singapore competition regulators fine Capri, Village Hotels, Crowne Plaza for sharing data

Crowne Plaza Changi Airport Hotel, from OUE Hospitality Trust portfolio, taken from Changi Airport terminal in July 2018.Crowne Plaza Changi Airport Hotel, from OUE Hospitality Trust portfolio, taken from Changi Airport terminal in July 2018.

This article was originally published on Wednesday, 30 January 2019 at 16:48 SGT; it has since been updated to include comments from Far East Orchard, the Far East Organization, Inter-Continental Hotels (Singapore), OUE, OUE Hospitality REIT and Frasers Hospitality.

The Competition and Consumer Commission of Singapore announced fines of a total S$1.52 million on Wednesday against the owners and operators of several hotels, saying that they shared pricing details on their corporate customers and caused “serious harm to competition.”

The hotels were the Capri by Fraser Changi City Singapore, the Village Hotel Changi, the Village Hotel Katong and the Crowne Plaza Changi Airport Hotel, CCCS said in a statement on Wednesday.

Sales representatives for the hotels exchanged information which likely influenced their market conduct or gave them an advantage over their corporate customers in contract negotiations, CCCS said as it issued the infringement decision.

“They disclosed to each other the corporate room rates that had been negotiated on a confidential basis and agreed upon with specific customers,” the statement said. “They also discussed future price-related strategies such as their proposed price increases for the following contractual year, their proposed bid prices in response to customer requests, and whether or not they intended to agree to a particular customer’s price reduction request.”

The investigation found that sales representatives of Capri and Village Hotels exchanged commercially sensitive information related to their corporate customers from at least 3 July 2014 to 30 June 2015, the statement said.

In addition, sales representatives of Capri and Crowne Plaza exchanged commercially sensitive information from at least 14 January 2014 to 30 June 2015, it said.

The statement said that CCCS sent each party a notice of its proposed infringement decision in August and that it received oral or written submissions from the parties involved by early October.

Capri

The Capri was owned by Ascendas Frasers (AFPL) until 30 March 2015, and by Frasers Hospitality Trustee (FH Trustee) from 31 March 2015, while Frasers Hospitality (FHPL) was the appointed agent for the management and operation of the hotel, the statement said.

AFPL and FHPL received a financial penalty of S$793,925, and FH Trustee and FHPL received a penalty of S$216,526, it said.

Frasers Hospitality said in a statement on Wednesday that it was disappointed with the decisions as it had made “rigorous representations” to CCCS in August.

“Frasers Hospitality does not condone anti-competitive conduct and continues to take a serious view against it. As part of its ongoing efforts to strengthen its compliance standards, Frasers Hospitality will be providing even more rigorous training to its employees,” the statement said.

“All matters in relation to the day to day management and operation of Capri Changi were conducted solely by Frasers Hospitality as the operator and not by the owner(s),” it added.

Village Hotels

The Village Hotel Changi is owned by Far East Organization Centre (FEOC), while Orchard Mall (OM) owns the Village Hotel Katong, with Far East Hospitality Management (FEHMS) the appointed agent for managing and operating the Village Hotels, it said.

FOEC, OM and FEHMS received a financial penalty of S$286,610, the statement said.

In a filing to SGX on Wednesday, Far East Orchard said that its subsidiary, FEHMS, and the two hotels under management had “made robust submissions” to CCCS in response to the allegations and it was “disappointed with the decision,” although the group would respect it.

“The group takes legal compliance very seriously and will continue to focus on growing its business in a principled and ethical manner with strict adherence to all applicable laws,” Far East Orchard said in the filing Wednesday. “It has and continues to routinely review and implement robust compliance and training programs.”

In an emailed statement, Arthur Kiong, CEO of Far East Hospitality, said that the group was assessing its next steps.

In a separate statement, Oh Thay Lee, group general manager of the Far East Organization, said the company was reviewing the CCCS findings.

“We take legal compliance very seriously and will continue to demand strict observance with all laws from our staff, business partners and hotel operators.  A compliance program is in place,” he said in the statement.

Crowne Plaza

Crowne Plaza Changi Airport Hotel has OUE Airport Hotel as its owner/master lessee and Inter-Continental Hotels (Singapore) is the appointed agent for management/operation, it said.

OUE Airport Hotel and Inter-Continental Hotels (Singapore) received a financial penalty of S$225,293, CCCS said.

In an emailed statement, InterContinental Hotels Group said, “At IHG we focus on doing business responsibility and operating with integrity. We do not condone the behavior that was highlighted in the CCCS findings. One colleague from the hotel was involved and is no longer with us.”

IHG added that all of its hotel employees globally are required to complete e-learning training on ethics and compliance, which includes competition laws.

In a statement filed to SGX on Wednesday, OUE said that its wholly owned subsidiary OUE Airport Hotel has two months to file any notice of appeal to the Competition Appeals Board. That was in response to a Business Times article on Wednesday.

OUE Airport Hotel is the master lessee of the hotel under an agreement with OUE Hospitality REIT Management, which is the manager of OUE Hospitality REIT, and the REIT’s trustee, RBC Investor Services Trust Singapore, the REIT said in a filing to SGX on Wednesday.

 

Get the Shenton Wire morning briefing in your inbox