* Class action alleges travel industry giants fixed hotel
* Orbitz, Travelocity, Starwood among about 15 defendants
* Money damages sought
By Nick Brown
Aug 20 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 certain prices.
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,
Travelocity.com LP and its parent, Sabre Holdings Corp.
Also included are big-name hotel operators Marriott
International Inc and Starwood Hotels & Resorts
Worldwide Inc, which runs the Sheraton, W and Westin
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.
Representatives for Travelocity and Orbitz declined to
comment. Press contacts for Starwood, Hilton, Marriott, Expedia
and Sabre did not respond to requests for comment.
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
The five-count complaint seeks money damages with interest.
The case is Turik et al v. Expedia Inc et al, U.S. District
Court, Northern District of California, No. 12-4365.