Report uncovers Paris hotels' collusion, imposes fines
Reports released by the Competition Council in France uncovered six Paris hotels colluded on price strategies and sales figures. Fines were as high as $292,000 or euro248,000.By JOCELYN GECKER
The Associated Press
PARIS, Dec. 7 -- When Madonna last played Paris she stayed at the George V hotel. Lance Armstrong prefers the Crillon. When "Sex in the City" used the City of Light for its grand finale it featured The Plaza Athenee, resplendent with red geraniums and Parisian glamor.
A doorman greets guests in front of the Christmas decorated Ritz four star hotel, located Place Vendome in Paris, Wednesday. Last week the French anti-trust regulator caught six lavish Parisian hotels, the Ritz, the Meurice, the Bristol, the Crillon, the George V and the Plaza-Athenee, colluding on price strategies and sharing confidential sales figures, and imposed fines. (AP Photo/Remy de la Mauviniere)Paris' poshest hotels prefer this sort of star-studded publicity to recent headlines documenting the fines imposed by France's antitrust regulator, after it caught them colluding on price strategies and sharing confidential sales figures.
When the Competition Council published the results of its four-year investigation last week, it provided a rare look at the business behind the lavish facades of the six hotels known as the Palaces of Paris: the Hotel de Crillon, Ritz, George V, Plaza Athenee, Meurice and Bristol.
Although the hotels did not explicitly fix their prices, the watchdog's 57-page decision says they operated as a cartel that regularly exchanged confidential information which had the result of keeping prices artificially high.
Fines for the hotels ranged from euro55,000 ($65,000) for the Hotel Meurice, where the Chinese prime minister stayed this week, to euro248,000 (US$292,000) for the fabulously opulent Crillon, built as a palace for Louis XV on the Place de la Concorde.
E-mails, faxes and other documents confiscated from the hotels detail how they systematically swapped figures on the previous month's occupancy and room rates that helped to map out future marketing strategies and prices, averaging close to euro700 ($825) a night.
The hotels also shared breakdowns on the nationalities of their guests, how many Japanese-speaking staff they employed, and they joined forces on promotional strategies for the big-spending American market.
The frequent exchanges of information, deemed by the council to be strategic and confidential, allegedly helped the hotels to monitor each other and ensure that none of the six outperformed the others. The report said the cartel's "collusive" relationship enabled all six to prevent prices from falling after the Sept. 11, 2001 attacks, when other hotels were cutting their rates amid a global travel downturn.
Part of the intrigue over the case is that the hotels did not appear to think they were doing anything wrong.
"This practice has been in place for 30 to 40 years, where hotels share past results with each other," said Francois Delahaye, head of the Meurice and the Plaza Athenee, both owned by the Sultan of Brunei's Dorchester Group. "We did nothing illegal."
It was a November 2001 television documentary on the Palaces of Paris that prompted the investigation.
A camera crew from channel M6 was invited into a chandelier-filled suite at the Bristol Hotel to film what it described as a monthly meeting of marketing directors from the six hotels. Seated on a silk brocaded chair, a representative from the Ritz, apparently not realizing she was confessing publicly to illicit activity, explained on-camera how regularly exchanging data helped each hotel to analyze its competitors and sometimes reach agreements on prices.
Within a month, the antitrust regulator opened an investigation and carried out simultaneous raids at all six hotels, seizing documents and computer hard drives.
Exchanges between hotels ranged from formal to friendly and occurred as often as every week, the report said.
"I have the pleasure of sending you our results and await yours," reads a Feb. 2, 2001 e-mail from the George V's head of sales, identified only as Madame X, to her five counterparts at the other hotels.
The hotels have until the end of the year to appeal, though so far only the George V has said it plans to do so.
"It is absolutely unjustified," said Didier Le Calvez, general manager of the George V. "I know exactly what antitrust laws are. And I can assure you at no moment have we ever consulted on our pricing strategy."
The George V, owned by the Four Seasons off the Champs-Elysees, was fined euro115,000 ($135,000), the Plaza Athenee euro106,000 ($124,000), the famed Ritz Hotel euro104,000 ($122,000) and the Bristol euro81,000 ($95,000). Fines were levied according to each hotel's sales and the length of time they had engaged in the illicit activities.
The Crillon is weighing an appeal but not against the charges of collusion, said Francoise Parguel, spokeswoman of the hotel, whose guests over the years have included U.S. presidents, Japanese Emperor Hirohito and conductor Leonard Bernstein, who has an euro8,000 ($9,400)-a-night suite named after him.
"We're not going to enter into the debate of whether these things happened," she said. What the Crillon objects to is that the fine was based on the revenue of its owner, the Concorde Hotels Group, which owns a half-dozen other big Paris hotels. "That is why the Crillon has the biggest fine, not because it was more to blame than the others."
For guests staying today at one of the luxury hotels, the revelations have little concrete impact. The illegal activity started in 1999 and ended in 2001, when the investigation started, the report said.
Outside the Ritz Hotel, where Coco Chanel once had an apartment and Princess Diana spent her final hours, an American couple said they wouldn't have dreamed of staying anywhere else.
"This is our first time in Paris. We don't know if we're coming back and we wanted to do it right," said Ruth Anne Boykin, admiring the hotel's decorated Christmas tree. Her husband, Bill, added: "It's $560 a day, and I would say it's worth it. After all, this is the Ritz."
Story Produced by: Lindsey N. Kirkland
