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Colossal consumer class action names most US hotels

March 21, 2018 Headline News No Comments Email Email

A big US legal firm has named some of the world’s best-known hotel chains in a colossal “no win no fee” class action that accuses hotels of engaging in an anti-competitive agreement to raise prices.

The action covers about 60% of all hotel-room inventory in the US and the amount involved could potentially run to billions of dollars.

Lawyers contend that millions of consumers have been affected by anti-competitive practices extending for years.

The suit, filed on Monday in the US District Court for the Northern District of Illinois, contends that defendants engaged in an anti-competitive agreement to eliminate online branded keyword search advertising against each other.

This, according to the suit, deprives consumers of the free flow of competitive information, thus hiking prices for hotel rooms and also increasing the cost of finding hotel rooms.https://www.travelcounsellors.com.au/au/leisure

Hotels named in the lawsuit are:

  • Choice Hotels International – including Comfort Inn, Comfort Inn Suites, Quality Inn, Sleep Inn and all other Choice Hotels International-branded hotels.
  • InterContinental – including Holiday Inn, Holiday Inn Express, Candlewood Suites, Crowne Plaza, Staybridge Suites and all other InterContinental-branded hotels.
  • Wyndham – including Travelodge, Super 8, Knights Inn, Ramada, Days Inn, Howard Johnson’s and all other Wyndham-branded hotels.
  • Hilton – including Hampton Inn, DoubleTree, Embassy Suites, Homewood Suites, Hilton Garden Inn, Waldorf Astoria and all other Hilton-branded hotels.
  • Marriott – including Sheraton, Starwood, Ritz-Carlton, Residence Inn and all other Marriott-branded hotels.
  • Hyatt – including Park Hyatt, Grand Hyatt and all other Hyatt-branded hotels.

As the suit has only just been filed, some of the named hotel chains have yet to respond. The allegations against the hotels in the complaint have not been substantiated in a court of law.

In an early response, a Marriott spokesperson told the US business travel news site SmartMeetings.com: “We are reviewing the complaint now. At this time we have no further comment.”

Courthouse News Service in the US quoted Hyatt spokeswoman Stephanie Lerdall and Hilton spokeswoman Meg Ryan saying they could not comment on pending litigation.

The legal firm behind the lawsuit, Hagens Berman, says its investigation revealed that 60% of all hotels have been involved in an overpricing scheme, increasing the price of consumers’ hotel rooms.

It advises US consumers: “Chances are, if you booked a hotel in 2015, 2016 or 2017, you overpaid for it.”

Hagens Berman describes itself as one of the most successful consumer litigation law firms in the US, “which has achieved more than USD 260 billion in settlements for consumers in lawsuits against food corporations, automakers, big banks and others”.

The firm’s managing partner is Steve Berman, a formidable lawyer who according to Wikipedia was lead attorney in individual and class action cases against Enron, Washington Public Power Supply System, Purdue Pharma (over OxyContin), Exxon (with respect to the Exxon Valdez oil spill), Boeing, Intel (over alleged monopoly practices), Michael Milken, the Rio Tinto mining company (with respect to human rights violations and environmental destruction in New Guinea), and VISA and MasterCard “in which he achieved a USD 3 billion settlement”.

Hagens Berman says its lawyers have found that the six hotel chains agreed to “reduce competition and raise prices for their hotel rooms”.

An outline of the suit on the Hagens Berman website says:

“In this agreement, competitors wilfully refrained from bidding for online advertising that would appear in response to searches containing the competitors’ brand names. For example, Hilton Hotel declined to bid to have its ads appear in response to internet searches for Hyatt, thus making it more difficult for consumers to get information about and compare and contrast competitive information, such as price and quality, between the two hotels.

“By agreeing not to advertise in response to searches for competitors’ brands on popular online search engines, these hotel chains have effectively reduced the ability for consumers to conduct a reasonable comparison between various competitors to get the best price for their hotel rooms. This in turn, leaves hotel chains with free reign [sic] to keep prices high, with no threat of consumers seeing competing ads.

“To increase their hold on the hotel market, these six hotel chains also forced their hand with online travel agencies (such as Priceline.com or Expedia), to keep them from bidding on branded keywords as well. Online travel agencies need access to hotels’ room availability and other information. In exchange, these hotel chains made the travel agencies play by their rules, keeping them from advertising for their branded keywords, thus making it less likely consumers would see the choices available on those online travel agency websites.”

Hagens Berman goes on to state that it believes consumers “deserve to pay fair prices for their hotel rooms, not inflated prices raised by the big chains that own the majority of the hotel industry.

“Our firm will fight for your right to a just hotel room-pricing system. We believe these hotel chains should pay consumers a refund…” It also says the hotels should end the alleged scheme.

The site further states: “There is no cost or fee whatsoever involved in joining this case. In the event Hagens Berman or any other firm obtains a settlement that provides benefits to class members, the court will decide a reasonable fee to be awarded to the legal team. In no case will any class member ever be asked to pay any out-of-pocket sum.”

Written by Peter Needham

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