Objecting to price increases hidden as fees, major US cities sue Expedia, others

Iria · May 15, 2006, 08:42 PM

Source: Ars Technica
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Travel services have moved to the Internet, and the change has been embraced by consumers looking for cheap airfares and discount hotel rooms. Major US cities are less pleased with the online activities of websites like Expedia and Orbitz, though, which they charge have failed to pay substantial sums in hotel taxes over the last few years. The result of this displeasure is a series of lawsuits targeting the online discount hotel business.

San Antonio, Los Angeles, San Diego, Philadelphia, Atlanta, and Chicago have all filed lawsuits against the major online hotel brokers, alleging that the firms have snapped up rooms at low rates, then turned around and sold them to consumers without paying hotel taxes on the higher prices. The dispute centers on this price difference between the wholesale price and the retail price. Online travel sites insist that they are not marking up the price of the hotel room, but simply adding a service fee to the price. Such a service fee would not be taxable.

May 15, 2006, 08:42 PM	#1
Iria DriverHeaven Extreme Member Join Date: Apr 2004 Posts: 7,275 Rep Power: 89	Objecting to price increases hidden as fees, major US cities sue Expedia, others Source: Ars Technica __________ Travel services have moved to the Internet, and the change has been embraced by consumers looking for cheap airfares and discount hotel rooms. Major US cities are less pleased with the online activities of websites like Expedia and Orbitz, though, which they charge have failed to pay substantial sums in hotel taxes over the last few years. The result of this displeasure is a series of lawsuits targeting the online discount hotel business. San Antonio, Los Angeles, San Diego, Philadelphia, Atlanta, and Chicago have all filed lawsuits against the major online hotel brokers, alleging that the firms have snapped up rooms at low rates, then turned around and sold them to consumers without paying hotel taxes on the higher prices. The dispute centers on this price difference between the wholesale price and the retail price. Online travel sites insist that they are not marking up the price of the hotel room, but simply adding a service fee to the price. Such a service fee would not be taxable.