Popular Online Travel Sites, Hotels Face Price-fixing Class Action

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Seattle, WA: Consumers have filed an antitrust class-action lawsuit against several online travel sites including Expedia, Inc, Travelocity,, a subsidiary of, and the nation's largest hotel operators including Hilton Hotel, Sheraton Hotels and Resorts, a subsidiary of Starwood Hotels and Resorts Worldwide, and Marriott International, Inc, claiming the two groups conspired to use their market dominance to fix prices on hotel rooms across the country.

The lawsuit, filed August 20, 2012, in the U.S. District Court for the Northern District of California on behalf of hotel-room purchasers nationally, alleges that the online hotel retailers conspired with major hotel defendants to secretly create and enforce Resale Price Maintenance (RPM) agreements to thwart competition on hotel room prices, especially from price-cutting online retailers.

The complaint contends that the defendants' unlawful conduct caused plaintiffs and other class members to overpay for their purchases of room reservations and seeks to represent all consumers who have purchased hotel rooms from the online retailer defendants.

"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," said Steve Berman, managing partner and co-founder of Hagens Berman. "The reality is that these illegal price-parity agreements mean consumers see nothing but cosmetic differences and the same prices on every site."

According to the complaint, online travel sites account for as much as 50 percent of hotel bookings in the United States and traditionally operate under one of two models. Under the agency model, online retailers charge a service fee to a hotel operator on a transaction basis for booking customers, and that customer pays the hotel directly at a rate set by the hotel.

Under the merchant model, online retailers purchase rooms outright at a negotiated rate from the hotel, and then resell the rooms to consumers at a higher price, increasing or decreasing margins depending on competitive influences.

More recently, a new model has emerged that has cut into the traditional online retailers' profits, the complaint contends, and has led to the creation of the RPM agreements. In this model, known as the Wholesale Model, third-party companies buy up unsold blocks of rooms at the last-minute and resell them to smaller price-cutting online retailers, eroding the profits of the traditional online retailers.

Knowing hotels cannot afford to lose access to online distribution networks, online retailers devised an illegal scheme, extracting agreements from the hotels that online retailers may not sell rooms below the RPM rates -- even through the wholesale model -- on penalty of termination and as a condition of doing business through the online retailers, the lawsuit contends.

The complaint states that the online retailer defendants often use terms like "best price guarantee" to create the impression of a competitive market, but in truth these are nothing more than a cover for the price-fixing conspiracy. "The cold fact is that there are no 'best prices' but instead there is only a fixed price that all the defendant online retailers tout in unison," Berman added.

"We have abundant information that points to the existence of written or verbal agreements between the online retailers and hotel companies about the existence and enforcement of RPM agreements," Berman noted.

For example, in published statements, a spokesperson for Sabre Holdings which operates Travelocity admitted it uses RPM agreements "so that the customer can have the confidence that they will get the best rate and they don't have to go on 18 different sites."

The suit alleges that the defendants' activities violate both the federal antitrust laws, as well as California's Cartwright Act.

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Reader Comments

Posted by

I would like to find out if there is a way to join a suit against, aka, aka TravelNow. They have used all three names in trying to avoid responding to me. American Express refused to reverse the charges, even though this was a fraud charge. I didn't get the reservation, the hotel where I originally booked received no money and they are not refunding even though the stay was not until October. The booking was done through a Google booking search app and it was not noted until the receipt that this could not be changed or refunded. No credits, no changes, no refunds. Complete scam. I may have to pay initially, but I'm going to file complaints where ever I can.

Posted by

I had to dispute the charge with my credit card company as the booking was so horrible. also took down my negative review, yet they claim all reviews are valid. their customer service rep even told me that their rating was high so why was I not happy? Well when you suppress the bad reviews, that is also false advertising. lawsuits should look into that as well.

Posted by

Made hotel reservation with but the room booked is only for one adult (overseas). I have contacted them over the phone and asked to adjust the reservation. Was promised the issue would be resolved in less than 48hrs (lie #1) . Five days have lapsed, I have been on the phone four times, each time for over 90min waiting for the fictitious supervisor lie #2-5. I have emailed them three time, each time receiving the confirmation email assuring me they will respond with 48 hours (lie #6-8)

Filed complaint with Better Business Bureau and the Federal Trade Commission.

I am surprised these fraudsters are still in business.

Posted by

I recently used to book my hotel. They advertised a swimming pool and grat location. They completely mislead people. I cancelled my reservation and Motel 6 still charge my card. I told that my card should not been charge for a motel 6... And their answers was "they chatged me because I input my card number" ...

Posted by

Hello there I was on homestead for vacation with my family and I decide to book and hotel in this Expedia website the a mistake when a arrive to the hotel name was Floridian the rooms where stinky and ask them to change mi room with they did and the other rooms where the same stinky and with. Ants on the bathrooms and after three stinky rooms I decide to leave and I ask for mi money refund wich the manager declined to do so I decide to call Expedia to get mi almost 200 dollars back for one night and surprise I can't get mi money back because I was obligated to stay on that stinky room with mi wife and mi two children's this can't be happening they ruin mi day and mi children's day because I move over to a better place and they keep mi money this is a rip off of you don't like the service you get for your money you should be entitle to a full refund if you don't use any service o I'm wrong I soon you get to the hotel you are abligated to stay no matter what this is like I nightmare how can a service provider can do that to his costumers unvelieable specially here in USA

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