Online travel company lawsuits heat up, cool off

Going back more than 10 years, U.S. city and state governments have been suing online travel sites for underpaying general excise and hotel taxes. Now, lawsuits filed years ago are being heard and the story continues as mixed verdicts come in.

First, here’s the beef. Online travel companies purchase unused hotel room inventory and then sell those rooms to consumers at a marked-up price. The online travel company pays the hotel occupancy tax on the discounted rate that it purchased from hotels and not on the rate charged to its consumers.

Cities from Honolulu to Houston to Washington D.C say “that’s not right” and want the taxes actually charged to be paid.

Online travel companies like Expedia, Orbitz, Travelocity, Hotwire.com, Hotels.com, Priceline and others say “forget it, we’re not paying.”

Some lose, some win as the issue plays itself out.

In January, Houston, Texas lost it’s battle when a a Texas trial court judge dismissed the allegations. “These claims are not based on law, but on the greed of plaintiffs’ attorneys,” Andrew Weinstein, spokesperson for the Interactive Travel Services Association told the Southeast Texas Record.

It’s a sketchy claim at best and both sides have their share of supporters and valid points.

“If the city’s right, all that means is there’s been an under-collection of taxes, and the city can’t sue us for that,” said Frank Lowrey, an attorney representing the firms to Business Week. “They’re telling us to collect more taxes than we said we would collect.”

Similar lawsuits or complaints have been filed around the country by cities and states including in Oklahoma, Maryland, Texas, New York, Illinois, Pennsylvania and in the California cities of San Diego and San Francisco. While some of the complaints have been dismissed, several are still pending.

Is this just cities and states grasping at any possible income source, however bizzare it may sound? Maybe, but that’s nothing new either. Just last year Gadling reported on how the state of Tennessee wanted to tax complementary hotel breakfasts and before that we reported how taxes are becoming a larger part of travel expenses all the time as cities and states are pumping up their coffers at the expense of visitors.

Those who lay claim to jobs as lawmakers may not have the oldest profession in the world but sometimes they sure act like it.

Flickr photo by Love My Tours

Related Stories



Hotel booking tip: Hotwire + upgrade = deal

There are many strategies for successfully booking hotel rooms on “opaque” booking sites. “Opaque” booking sites, for those unfamiliar with the term if not the thing itself, sell brand-name hotel rooms, among other goods, for discounted prices. The catch is that these hotels are never named in advance. The “opaque” booking sites help hotels fill their rooms at rates often far below hotel rack rates.

Some frequent travelers have developed a science out of gaming opaque booking sites. Better Bidding is one essential tool in this endeavor. It offers bidding tips and other information designed to allow users to figure out which description matches up with which anonymous hotel, thereby allowing customers to pick and choose a favored hotel.

Here’s a less crafty tip, one that can nonetheless be very helpful for finding a mid-range hotel bargain.

Twice in the past two months I’ve booked hotels in London and San Francisco on Hotwire. In both instances the hotel reservation was relatively speaking quite inexpensive: $99 for the London room and $110 for the San Francisco room.

Unfortunately, both bookings resulted in hotel rooms that were far from ideal.

In London, the Hilton London Docklands Riverside room booked through Hotwire ($99) was very cramped and not particularly well maintained. The bed was tiny and the view was of the traffic circle in front of the hotel. A £20 ($32) upgrade option gave us a recently renovated and much larger Deluxe room with a view of the foggy Thames. Our Hotwire-plus-upgrade rate ($131) turned out to be much less expensive than the lowest rack rate I found during research ($217).

In San Francisco, the room we booked through Hotwire at the Intercontinental San Francisco ($110) had two separate beds. We didn’t even take a look at it, instead inquiring about an upgrade. $30 per night later and we had a 17th floor corner king with sweeping views north and west. By our calculations, we saved almost $40 off the least expensive rack rate in the process.

(Image: Flickr / hotelkursaal&ausonia)

Budget Travel: Hotel deals at Hotwire

How well do you handle the unknown? If you don’t have the stomach for it, avoid Hotwire. Now, if you don’t mind taking a bit of risk, you can save a fortune by using this website to book your next hotel in the United States (or a limited list of international destinations). I’ve used Hotwire several times, and the vast majority of my experiences have been great. The one that wasn’t (only one) had nothing to do with Hotwire; I was just disappointed with the hotel.

Hotwire is one of the many bargain travel websites that is fighting to carve out some turf on the web. Unlike the others, it delivers some amazing prices. You just don’t know where you’re going to stay until you pay for the rooms. Using Hotwire, you enter the city where you want to stay, proximity to neighborhoods or local attractions and the caliber of hotel you prefer. Star ratings are assigned to each property to help you judge quality, and they are based on Hotwire user feedback. As a reference point, the website does tell you the types of property that are commensurate with a particular rating. So, the process isn’t completely blind, but you still don’t know where you’ll hang your hat.

I used Hotwire three times last year to book hotels in Washington, D.C. I stayed at Capital Hilton, Hilton Washington and the Hotel Helix. My experiences were generally positive with all three.

At the Washington Hilton, I had to walk a lot farther than I expected from the subway station, which is apparently a common problem. The staff at the front desk saw my tired, sweaty face and said, “Yeah, most of the websites make the hotel seem a lot closer.” Immediately after that, he ran to get me some moist paper towels to help me cool off. The hotel itself was excellent, particularly at a discount of more than 70 percent. I also booked the Capital Hilton through Hotwire and had no surprises at all. Again, I saved more than 70 percent and was thrilled.

The Hotel Helix was a bit disappointing. In my opinion, it should have been rated a full star lower than it was, and I left feedback on Hotwire to caution future users. Hotwire itself wasn’t the problem. The rate was fantastic, and I was able to save some money on a trip with little lead time. But, I just didn’t like the hotel. Why do I say this? It happens, and you need to know that flexibility is necessary. Sometimes, you won’t be thrilled with your room. That’s just the risk involved with Hotwire.

Now that you know the good and the bad, let’s talk about money. It’s routine to save more than 50 percent of a hotel’s regular rate using this website (at least in my experience). Hotwire is able to do this by finding the unsold inventory at hotels around the country and bargaining for deep discounts. In the hotel industry, a room-night is a perishable commodity. If you don’t fill Room 437 on March 16, you can’t save it for later. Sometimes, it’s better to get something than nothing. Also, the hotels don’t can avoid implicitly devaluing their rooms through the blind process. This is the service that Hotwire provides to hotels … and to you.

The deals vary. If you are looking for a great room during peak season, you’ll probably be disappointed. But, if you have reasonable expectations, they’ll probably be exceeded. On a recent search, I found hotel rooms for under $150 in downtown Boston for mid-March (at a property given 4 ½ stars). I also found sub-$100 rates in Paris (four stars) and London (four stars, as well) for the same period.

After you book one of these great deals, don’t forget that you have an obligation when you get home. Just as you read the reviews before taking your step into the unknown, many will follow you. Help them out as others helped you. Hotwire will send you an e-mail asking for your feedback on your stay. All you have to do is click the link and complete a brief survey.

Do it.

You can go as long or short as you like, but people will read – and rely on – your review. If you have booked a room using Hotwire, you probably will again, and you’ll read the reviews. So, participate in the process. It’s what you want everyone else to do.

%Poll-26252%

Want a cheap way to travel to Europe? Check out a “positioning” cruise

A friend of mine is writing a memoir about her mother’s life. Part of it includes details about her mother’s work as a “ladies maid/companion” of sorts for an alcoholic, wealthy woman. My friend is British– and her mother died when she was well into her 80s living an ordinary life through a world rife with change.

Sprinkled throughout the memoir are historical details to set the place and time. I find it a fascinating read, particularly the details about her mother’s travels on a cruise ship. If it weren’t for her job, my friend’s mother would have never taken a cruise–or seen the world past her working class roots. Cruises were not part of her station in life.

These days, of course, cruises are such great deals that you don’t have to hire on as a companion to someone to make a trip across the ocean. Ed Perkins, travel writer commentator suggests another way to score the cheapest option. According to Perkins, “positioning cruises” can get you to Europe in 13 nights for $599 if you don’t mind a non-ocean view cabin. If you want to see the ocean, the cost is $900 more. These are the prices he found from Miami to Barcelona from Hotwire.com. There are many, many options.

If you are flexible, prices go down the closest you get to the time the ship pulls away for shore. If you run with your suitcases flying behind you yelling “Wait for me! I can leap across” as the ship is starting to pull away, the price is almost free. Just kidding. I made that part up.

It is true that prices go down the closer to the departure day, though. These cruises aren’t the type that go from port to port to port. This is a trip across the ocean with the amenities on board. There may be a Bahamas stop, but, that’s it. The scope of the amenities depend on what sort of cruise ship you are on–mass market vs boutique.

As Perkins points out, since this is a one-way trip, you eventually need to have a one-way flight back to the U.S. if that’s where you are heading. One-way flights can be arranged, and are often cheaper if tacked onto your cruise deal. I wonder if you waited long enough, you could find a similiar deal for the return trip?

If I were having a “gap year” that Neil writes about, I think this would be an excellent way to start it off. While you’re staring out across the waters, pondering, letting your mind wander, you can imagine all the places you could go with days, weeks, months of exploring the world and meeting folks before you.

The article I read was in yesterday’s Columbus Dispatch, but there isn’t a link to it. Here is another article, also by Perkins from last September. He makes the same suggestions, although, the prices are lower this time of year.

In another article I found, this one by Arthur Frommer, Frommer suggests contacting major cruise lines to find out about this type of cruise deal, although, I think the deals he is referring to are on the ships that are coming back the other way. He calls them “repositioning” cruises.

Here’s a link to AffordableTours.com which may be a place to start whether you are “positioning” or “re-positioning”. The major cruise lines are listed.