Though hotels are able to offer better rates and services through competitor travel sites and offline channels, they cannot mention them on their main webpage.
The B&B Association warned that failure to comply could result in operators being ‘ostracised’ from the site, which processes 4.5m room night bookings every week.
"The B&B Association challenges Booking.com to defend how it uses its dominant position in the market to bully small independent B&Bs and hotels by preventing them offering their best prices on their own websites,” said David Weston, chief executive of the B&B Association.
“We strongly believe that the Competition and Markets Authority should address this gross imbalance of power, returning some from this global giant back to the individual B&B and hotel owners.
“This new settlement, thrashed out behind closed doors in Europe, is wrong, anti-competitive, and against the interests of consumers."
A statement on the Booking.com site said the agreement ultimately benefited consumers and hoteliers by creating ‘an environment that supports increased transparency and competition among online travel agencies…by encouraging the freedom for properties to offer different pricing and booking policies through different online travel agencies’.
Though the terms do not currently apply to the UK, Booking.com said it intended to implement the new agreements throughout the EU and is working with ‘all other European National Competition Authorities’ to do so.
Following the settlement, London-based start-up Triptease announced partnerships with seven global hotel booking engine providers. The company’s Price Check widget is designed to challenge the dominance of OTA's by allowing hotels to match the prices provided by online travel agents.