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Hotel booking sites must review the way they rank and display rooms, the UK's competition watchdog has said.

Some sites may be making misleading claims about discounts, the Competition and Markets Authority said.

It is also examining whether sites are giving a false impression of room availability and "rushing" customers into booking decisions.

The CMA did not name which companies it has been investigating, but leading sites include Expedia and Booking.com.

The extent to which a hotel's ranking may be influenced by the size of the commission it pays was another issue highlighted by the CMA.

'Trust'

The CMA, which launched its investigation into online booking sites in October, says it has sent warning letters to "a range of sites", demanding they review their practices to make sure they are fair and comply with consumer protection law.

Concerns include:

How search result rankings are influenced by factors irrelevant to consumers, such as how much commission a hotel pays the site

Whether a false impression is created by claims about how many people are looking at the same room, how many rooms are left, and how long a price is available

Clarity over discounts, including whether a weekday rate is being compared to a previous weekend rate

Whether holidaymakers are hit with unexpected extra charges such as taxes and booking fees later in the booking process

About 70% of people who shop around for accommodation use hotel booking sites, according to the CMA.

"Booking sites can make it so much easier to choose your holiday, but only if people are able to trust them," said Andrea Coscelli, chief executive of the CMA.

"We are now demanding that sites think again about how they are presenting information to their customers and make sure they are complying with the law. Our next step is to take any necessary action - including through the courts if needed - to ensure people get a fair deal."

Expedia, one of the leading sites, said: "Expedia Group continuously aims to deliver attractive travel options at affordable prices in transparent, clear and easy to understand ways, so that our customers can make informed travel choices. Expedia will continue to engage with the CMA on these consumer matters, as it continues its inquiries in the travel sector."

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Kate Nicholls, chief executive of UK Hospitality which represents hoteliers, welcomed the CMA's announcement saying it would bring "reassurance" for customers.

She added that the inquiry should lead to a wider review of the charges that these booking sites levied on hotels, which led to higher prices for holidaymakers.

"This is another example of digital businesses stealing an unfair lead on honest, regulated operators whose first concern is to deliver good service to their customers," she said.

Lavinia Dagostine has run a nine-room guest house in Dorset for 11 years and said that these sites could make life difficult for traditional providers. She relies on her own website and return guests before sending vacancies to a booking site.

"It means that smaller B&Bs get left out because they can't afford to pay commission on top of all their other expenses," she said.

"I agree it is easier for the booker but the commissions they charge the hotel or B&B sometimes take away any small profit that can be made, making us have to increase our prices."

Unlimited fines

The watchdog has ordered the sites, which it has not officially named, to review their practices, and to respond within the next few months.

At the end of the review, the sites can either give a legally-binding commitment to change the way they operate, or argue their case that their practices do not break the law.

If the CMA disagrees with their arguments, it can take the companies to court, where unlimited fines can be levied.

It has also raised various price guarantee claims with the Advertising Standards Authority.

Separately, the new EU Package Travel and Linked Travel Arrangements Regulations come into force on Sunday.

The changes mean that package holidays consisting of a flight, hotel, car-hire or other tourist services - either bought online for an all-in price or through linked web pages - will get the same protection as packages bought in travel agencies.

These protections include being flown home or a refund if a travel company or airline goes bust.