UK hotels and online travel agents will have more freedom to offer discounts on rooms following an Office of Fair Trading (OFT) investigation into deals struck by Expedia and

The OFT looked into the issue after concerns InterContinental Hotels Group (IHG) – which owns Holiday Inn, Holiday Inn Express and Crowne Plaza – had struck deals with the two online travel agents which restricted their ability to discount rates for room-only bookings at its hotels (see our Cheap Hotels guide for tips on cutting costs).

Now IHG says it will ensure all the online travel agents it works with can offer discounts on room-only prices.

The OFT also expects Expedia and to talk to their UK hotel partners over the next three months to get them to agree to allowing discounts on room-only rates.

Customers will be able to get the discounts by signing up to membership schemes. The OFT hopes the agreement will boost competition and lead to rival firms setting up their own schemes.

How will the discount work?

IHG, Expedia and will be able to offer you discounts on room-only rates, so long as you sign up to their membership scheme and make one undiscounted booking first.

The OFT says this initiative sets a minimum level of freedom for discounting rates. It won't affect existing loyalty or other discounting schemes.

What discounts will be offered?

Both the level of discounts offered, and whether or not there is a membership fee for joining the discount schemes, will be for the online travel agents and hotels to decide.

Will these discounts be applied to overseas hotel rooms?

No. This particular agreement only covers hotel rooms in the UK.

When will the discount schemes launch?

It will be up to each hotel and travel agent to decide how and when any discount schemes are launched. But the OFT says IHG, Expedia and will be monitored for the next two years, so it will be looking for action soon.

Will other travel agents and hotels set up similar schemes?

These commitments have only been offered by, Expedia and IHG in relation to their dealings with each other and their partners.

But the OFT is hoping this agreement will promote more competition across the hotel online booking sector, resulting in other firms setting up similar discount schemes.

Ann Pope, senior director in the OFT's services, infrastructure and public markets group, says: "The travel industry, fuelled by the internet, has seen significant changes in recent years, and we want to ensure those changes continue to work in consumers' interests.

"That is why we are pleased to have secured this outcome which, by allowing online travel agents and hotels to offer discounts, should increase competition and mean travellers across Europe can benefit from reductions on hotel accommodation throughout the UK.

"By shopping around, people can compare the different discounts offered by hotels and online travel agents, and ensure they get the best deal."