1 November 2009
How Expedia, Orbitz, Travelocity and other online travel companies (OTCs) create huge headaches for owners and operators on their suits over hotel occupancy taxes.
Billions of dollars of hotel rooms have been sold through the online travel companies or OTCs. Generally speaking, no transient occupancy taxes (TOT) or bed taxes, have been paid on the portion of these sales kept by the OTCs when they resell the rooms to hotel guests. The exposure on these unpaid hotel bed taxes easily exceeds $100 million — before interest and penalties.
Until now, most of the press has focused on the lawsuits brought by more than 200 local governments against Expedia, Orbitz, Travelocity and the other third party internet hotel booking companies. As many of these lawsuits now reach final resolution, some cities have announced that if they don’t win against the OTCs, they will take aggressive action to collect these lost bed taxes from the hotels themselves. And OTCs have said that if they lose, they may come back against the hotels.
Who will be the biggest loser in this high-stakes poker game, and how did we get here? If you think you already know that, then skip to end of this article to see if you also have a firm grip on the “5 things every hotel owner and operator needs to know.”