D.C. will sue online travel companies

Discussion in 'General Discussion | Travel' started by AmericanGirl, Mar 22, 2011.  |  Print Topic

  1. AmericanGirl
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    AmericanGirl Silver Member

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    The District will file a lawsuit Tuesday against four major online booking companies that the city claims have failed to pay millions of dollars in hotel taxes in the last decade-plus.

    The lawsuit targets Expedia Inc., Orbitz Worldwide, Priceline.com Inc., and Travelocity.com Inc. The District accuses the booking companies of remitting the city's 14.5 percent hotel occupancy tax on the discounted room price the booking agent paid, not the full retail price the traveler paid.

    We've written extensively about this issue, because, it seems, everybody is suing the online booking companies at this point.

    Here's the issue: Online travel agents negotiate wholesale rates for hotel rooms, and then re-markets those rooms to the public with a retail markup. Say a person books a Marriott room through Orbitz for $225, but Orbitz paid Marriott $200 for the room. The District collects the 14.5 percent tax on the $200 only, while Orbitz retains the $25 as a "service fee." And D.C. is out more than $3.50 in tax revenue for that one room.​

    Read more: D.C. will sue online travel companies | Washington Business Journal
  2. gleff
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    gleff Co-founder

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    DC is getting a hotel tax on the room rates received by the hotels. Makes perfect sense.

    Lots of jurisdictions have seen this as a potential cash cow. DC also tried to sue phone companies for the cash value of unused minutes on phone cards under its escheat laws, claiming those minutes were "abandoned property." Of course they didn't want the minutes so they could return them to their owners. They just wanted the cash...
    chrislacey likes this.

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