Jesse Jones

Biggest hotel brands sued by Seattle law firm for price-fixing

SEATTLE — They are some of the biggest names in the hotel industry: Hilton, Hyatt, Marriott. These brands and others are being accused of keeping their room prices artificially high by using price-fixing algorithms.

And in turn hurting consumers.

“Consumers are paying more for hotel rooms than they should if there was a competitive market,” says attorney Steve Berman.

He and his team have filed a lawsuit and are investigating hotels across the country from Miami to right here in Seattle.

“We think that room rates are probably 10% higher than they would be absent the scheme. And we’re highly confident that the rates in Seattle are too high,” said Berman.

The complaint says a company named Smith Travel Research has a product called the STAR report. The lawsuit claims the company’s own promotional materials say:

“Hoteliers use the STAR Report to gauge their competition, benchmark performance and identify ways to increase their revenue.”

Berman says it’s called ‘give to get.’ “You give me your pricing information and your occupancy rate, and you get the same information on your nearest competitors. So that allows me to see what my competitors charging, how occupied they are, and I can fix my rent instead of competing.”

Steve also says all of this runs afoul of the Sherman Act. A federal law that says agreements among competitors to fix prices is a crime.

We asked Steve Berman, how is this different than picking up the phone and asking competitors what they charge?  He said, “It’s different because you could make phone calls and maybe not get the right information.”

And, he says, you would need a full-time staff. Here it comes to you in a report. Once a week, you get the information of your competitor’s price and occupancy rate.

In response STR has filed a motion to dismiss the case. The company tells me the “complaint here fails to allege a valid antitrust theory and fails to include all the required elements to plead a conspiracy because there was none. STR will therefore vigorously defend itself in the lawsuit.”

Now, if this case feels familiar, it should. Berman’s firm is filing a similar lawsuit alleging some of the nation’s largest landlords are doing a similar thing with different software. He believes in the hotel case a rising tide of greed is lifting all of these companies’ financial boats.

“Oh, in the aggregate, it’s a huge amount of money. If you think of all the rooms that are sold, if it’s a $400 a night room, it’s $40 a night. we’re talking billions of dollars.”

Hilton is the only hotel company who replied saying “it doesn’t comment on pending litigation.” Berman tells me he expects a ruling on the STR’s motion to dismiss this fall.

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