Seattle-based travel site Expedia promises discount hotel rates to anyone looking to travel on a budget. However, a class-action lawsuit filed Monday accuses Expedia and a host of other travel sites of conspiring with hotel chains to fix prices at a rate that might be higher than consumers could otherwise obtain.
The complaint alleges that several online travel sites, including Expedia, Travelocity and Orbitz, have secretly conspired with the nation's largest hotel chains, including Hilton, Sheraton and Marriott, to fix hotel prices.
The alleged price-fixing is intended, according to the lawsuit, to stifle emerging competition from smaller, third-party online retailers. Many smaller online hotel retailers have offered lower rates through an emerging wholesale model. Through the new model, online retailers buy hotel rooms in bulk at the last minute at cheaper cost, and pass the savings on to consumers. Larger and more established travel sites use the traditional model of purchasing individual rooms from the hotel at a negotiated rate.
The emerging wholesale model, according to the lawsuit, has driven established travel sites to negotiate with hotels not to sell rooms below a certain rate, even in bulk or in the final minutes of sale.
In return, the lawsuit alleges, hotels gain by attracting the larger traffic that sites like Expedia and Travelocity offer.
A spokesperson for Sabre Holdings, which owns Travelocity, agrees that the company negotiates with hotels, but that it does not do so illegally and only "so that the customer can have the confidence that they will get the best rate and they don't have to go on 18 different sites."
The complaint is filed by Nikita Turik and Eric Balk on behalf of themselves and others in their situation. It accuses the defendants of violating federal antitrust laws.