Lawsuit Alleges Price-Fixing By Major Hotel Chains And Online Booking Sites

A class-action lawsuit filed yesterday in a U.S. District Court in California alleges that the biggest names in online travel — Priceline, Expedia, Travelocity, Orbitz, — and some of the world’s largest hotel chains — Hilton, Starwood, Marriott, Intercontinental, among others — conspired together so that the “best price guarantee” you often see when booking a room online is in actuality just a number set by the hotel operators.

The lawsuit [PDF] gets into the various types of arrangements that online travel sites have with hotels, but the complaint boils down to this allegation: Travel websites, in order to claim low-price guarantees, agreed to all set standard minimum pricing for rooms based on rates provided by the hotels; the hotels, in order to keep the revenue from these booking sites, agreed that it would not sell rooms at a rate below what the travel websites are offering.

So if you go to book a room at one of the defendant hotels, the suit claims you’ll likely see the same price listed at all of these sites, and that this number isn’t determined competitively by market pressures, but by the hotel.

Lawyers for the plaintiffs claim to have evidence of written and verbal agreements about such agreements between hotel chains and the websites.

“The large online travel sites, working with hotel chains, have created the illusion that savvy consumers can spend time researching hotel rates online to find good deals,” says one of the lawyers behind the lawsuit, which claims that the defendants violated various federal antitrust laws as well as numerous California statutes. “The reality is that these illegal price-parity agreements mean consumers see nothing but cosmetic differences and the same prices on every site.”

In addition to unspecified damages and legal fees, the suit is looking for an injunction to prevent further price-fixing.