If you’ve ever booked a room through Travelocity or any other online travel site, you might have wondered how much that company is paying the hotel operator for the room. Without even trying to, one Consumerist reader managed to find out what Travelocity actually paid for a recent stay at a Holiday Inn.
Andrew says he was processing an expense report for one of his employees when he needed to get a copy of the bill from the hotel.
But when the Holiday Inn sent over that invoice, he noticed that it was significantly lower than what the employee had paid. His employee had paid a total, including taxes, of $1280.40 for a 12-night stay, while the hotel’s paperwork only showed a total of $1,082.12, a difference of nearly $200.
“I called him back and asked about the discrepancy and was told the bill was for what Travelocity paid the hotel not what I paid,” Andrew tells Consumerist. “I called Travelocity and it was explained to me that the price I get on Travelocity was from the hotel’s website and that Travelocity has negotiated cost rates with the hotel and that’s how they make their money.”
Travelocity and Holiday Inn’s parent company, InterContinental, are both defendants in a class-action lawsuit that alleges the existence of a deliberate price-fixing scheme by online travel sites and major hotel chains. The plaintiffs claim that the websites agree to all use minimum prices set by hotel operators so long as the hotels agree to not sell rooms to anyone else at a lower rate.
The lawsuit argues that such an agreement effectively ends competition among the websites, which can not truly offer customers the best price available if all competitors are stuck offering the same rates.