Hotels and online travel sites sued for price fixing
Expedia's stock dropped dramatically.
Tess Vigeland: Most of us have gotten used to checking online to find the best travel deals. But when it comes to hotel prices, some of those so-called deals may be less of a bargain than you thought. Consumers have filed a price-fixing lawsuit against some of the world's biggest hotel chains and online travel sites.
Marketplace's Jeff Tyler reports.
Jeff Tyler: Online travel sites like Expedia and Travelocity market themselves as the best sources for the cheapest hotel rooms.
Travelocity ad: If they booked with Travelocity, they could be paying less for the same room.
Lawyer Steve Berman takes issue with such ads.
Steve Berman: When you get online and you see an ad from Expedia or Travelocity that says, ‘Best price or lowest price,’ that’s false. It’s an agreed price. No one is competing on price because they’ve all agreed that they won’t.
Berman represents consumers in a law suit against online brokers like Expedia and Travelocity and big hotel chains like Hilton and Sheraton. The suit alleges the travel sites colluded with hotels to fix the prices for online room reservations. A similar case is ongoing in England.
Berman: In Europe, Expedia has already admitted that it engaged in illegal behavior and is cooperating with the authorities in exchange for leniency.
How does the alleged price-fixing work? Dorian Harris runs a discount hotel booking agency called Skoosh. Companies like his buy hotel rooms from wholesalers at a discount. But when Harris tried to pass along that discount to consumers, hotels contacted his company and pressured it to raise rates.
Dorian Harris: They would say to us, ‘We’re selling at a hundred. Expedia is selling at a hundred. You either see us at a hundred or not at all.’
Neither Hilton Hotels nor Expedia responded to an interview request by show-time. In a written statement, Travelocity denies that it has engaged in any anti-competitive actions.
I’m Jeff Tyler for Marketplace.
You can read a PDF file of the class action court filing against the travel sites and hotels here.