Expedia Inc, Hilton Worldwide Inc and other large hotel retailers and operators were accused in a federal lawsuit in California of conspiring to fix hotel room prices as they battled small online retailers who sold rooms more cheaply.
Two consumers are seeking class action status for the suit
filed on Monday in California federal court, which alleges the hotels teamed
with online room sellers to set minimum rates on rooms and is seeking
unspecified money damages.
Plaintiffs Nikita Turik and Eric Balk say the companies
broke federal and California state antitrust laws with agreements whereby hotel
operators ceased doing business with online retailers that sold rooms below
The agreements, drawn up in meetings and during industry
conferences, were designed to combat mounting competition from smaller online
retailers that sold rooms more cheaply, according to the complaint.
The hotel operators played along because they could not
afford to lose access to business from the big online retailers, with the
online market now accounting for about half of all U.S. hotel room sales, the
lawsuit contends. If not for the scheme, consumers would have paid less for
rooms, the plaintiffs say.
In Britain, regulators announced provisional findings of a
breach of UK competition laws following an investigation of price-fixing for
hotel rooms involving online travel companies, British media reported in July.
Among the roughly 15 defendants of the California lawsuit
are online retailers Orbitz Worldwide Inc (OWW.N), Travelocity.com LP and its
parent, Sabre Holdings Corp TSG.UL. Also included are big-name hotel operators
Marriott International Inc (MAR.N) and Starwood Hotels & Resorts Worldwide
Inc (HOT.N), which runs the Sheraton, W and Westin hotel chains.
Travel sites "created the illusion" that
consumers could seek out the best deals, Steve Berman, an attorney for the
plaintiffs, said in a statement on Monday.
"The reality is that these illegal price-parity
agreements mean consumers see nothing but cosmetic differences and the same
prices on every site," Berman said.
Online retailers profit either by buying hotel rooms and
reselling them to the public at a higher price, or by charging hotels a fee for
the service of booking rooms.
The lawsuit alleges that the retailers' profits were
eroded when smaller, price-cutting online retailers, such as Skoosh.com, gained
access to the market.
The lawsuit paints price-fixing practices as common,
citing numerous accounts of companies admitting and sometimes defending it.
Please write your comment on the article "Hilton, Marriott face unfair business lawsuit" here:
*The editors office has the right to correct your comment orthographically and to abbreviate it.
This site is best viewed with Microsoft Internet Explorer 6.0+, at a minimum screen resolution of 1024 x 768.
Turkey, Thailand, Egypt, Indian Ocean, Germany, airlines, tour operators, travel agencies, hotels, travel law, tourists, tourist, travel warning, destination, Rixos, Gloria Hotels, TUI, Ahmet Barut, Fettah Tamince, Lufthansa, Air Berlin, Ryanair, SunExpress , Pegasus, Pep, RTK, Thomas Cook, FTI, alltours, Antalya, Aspendos, Turkish Prime Minister Recep Tayyip Erdogan, last minute deals, early booking, cruise, food, health tourism, jobs in tourism, job search, the best hotels, Russian tourism, restaurants