Ad description
The website www.grangehotels.com, visited on 6 September and 21 December 2011, quoted prices for hotel packages.
Under the heading "Spa Breaks," the ad listed the prices of hotels in London. Text at the top of the price column stated "Rates From (Ex. VAT)". Text at the bottom of the page stated "Terms and Conditions - Rates are per room, based on double occupancy. Extra people may be booked at an additional supplement of £75 per person per night, excluding VAT and subject to availability".
Under the heading "Afternoon Tea" the ad listed prices and locations. Text at the bottom of the page stated "Terms and Conditions - Prices are per person and exclusive of VAT".
Issue
The complainant challenged whether the prices on the website were in breach of the CAP Code, because they did not include VAT, which was a non-optional tax.
Response
Grange Hotels said most of their customers were business travellers and that their hotels were specifically designed, built and operated to satisfy the needs of the business travel market. They said their customers either paid no VAT or could recover VAT. They acknowledged that resort and leisure market-focused hospitality providers would typically display rates inclusive of VAT. They said they were in the process of completely rebuilding their website but undertook to ensure that all marketing that related to leisure or non-business consumers, which would include spa breaks, would display prices inclusive of VAT, together with a VAT breakdown. They said the afternoon tea packages would be removed altogether.
Assessment
Upheld
The ASA noted that the CAP Code stated that prices needed to include non-optional taxes, duties, fees and charges that applied to all or most buyers and that VAT-exclusive prices could only be given if all consumers to whom the price claim was addressed paid no VAT or could recover VAT, and that marketing communications that quoted VAT-exclusive prices needed to state prominently the amount or rate of VAT that was payable. We welcomed Grange Hotels' undertaking to ensure that price claims where not all consumers either paid no VAT or could recover VAT, would display prices inclusive of VAT. We noted, however, that, some months after the issue was raised with Grange Hotels and they gave their assurance, prices for spa packages and afternoon tea packages were still exclusive of VAT. Because not all consumers to whom those prices were addressed would pay no VAT or could recover VAT, and yet prices inclusive of VAT were not displayed, we concluded that the price claims were misleading.
The claims breached CAP Code (Edition 12)
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising) and
3.18
3.18
Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.
(Prices).
Action
The price claims must not appear again in their current form. We told Grange Hotels to ensure that prices inclusive of VAT were displayed where not all consumers to whom the prices were addressed either paid no VAT or could recover VAT.
